A few days ago, I started my series “Hidden Stock Market Gems” in which I am describing several publicly traded companies that don’t get much attention on Seeking Alpha although these are companies with a stable business model and a wide economic moat around the business. This leads not only to high growth rates for the business - in most cases - but also to an outperformance of the stock compared to the major indices.
In this article, I will continue the series with Waters Corporation (NYSE:WAT), which has a market capitalization of $11.5 billion and is listed in the S&P 500 (SPY).
Business Description
Waters Corporation is a technology company (sometimes also called a life science company), that is manufacturing and selling analytical laboratory instruments and software. It is located in the United States, was founded in 1958 by James Logan Waters and had its IPO in November 1995.
After an evaluation of the business in the recent past, Waters is now reporting in two operating segments:
- Waters - This segment is primarily designing, manufacturing and selling liquid chromatography (referred to as LC) and mass spectrometry (referred to as MS) technology systems. LC is a technique to detect, identify, monitor or measure the chemical, physical and biological composition of materials. MS is employed in drug discovery and development (for example, in clinical trial testing, nutritional safety analysis or environmental testing).
- TA - This segment focuses on designing, manufacturing and selling thermal analysis instruments, which are allowing the measurement of physical properties of substances as a function of temperature. The instruments can be split up into three categories: thermal analysis, rheometry and calorimetry machines.
Waters Corp.’s customers are mostly pharmaceutical companies, which were responsible for 56% of its revenue in 2018. This includes multinational pharmaceutical companies, generic drug manufacturers, contract research organizations (CRO) and biotechnology companies. About
