Scientific instruments company Waters Corporation (NYSE: WAT) announced better-than-expected revenue in Q2 CY2026, with sales up 113% year on year to $1.65 billion. The company expects next quarter’s revenue to be around $1.75 billion, close to analysts’ estimates. Its non-GAAP profit of $3.05 per share was 1.4% above analysts’ consensus estimates.

Is now the time to buy Waters Corporation? Find out by accessing our full research report, it’s free.

"Thanks to the hard work of our teams, we delivered industry-leading growth again this quarter, executing ahead of guidance across all four divisions," said Udit Batra, Ph.D., President & Chief Executive Officer, Waters Corporation.

Company Overview

Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE: WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Waters Corporation’s sales grew at a decent 11.7% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Waters Corporation’s annualized revenue growth of 27.1% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Waters Corporation’s organic revenue averaged 6.8% year-on-year growth. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Waters Corporation reported magnificent year-on-year revenue growth of 113%, and its $1.65 billion of revenue beat Wall Street’s estimates by 1.3%. Company management is currently guiding for a 119% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 48.3% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and implies its newer products and services will fuel better top-line performance.

ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention.

AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.

Adjusted Operating Margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

Waters Corporation has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 26.7%.

Analyzing the trend in its profitability, Waters Corporation’s adjusted operating margin decreased by 12.9 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 13.5 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, Waters Corporation generated an adjusted operating margin profit margin of negative 3.7%, down 32.8 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Waters Corporation’s EPS grew at a decent 5% compounded annual growth rate over the last five years. However, this performance was lower than its 11.7% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Diving into Waters Corporation’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Waters Corporation’s adjusted operating margin declined by 12.9 percentage points over the last five years. Its share count also grew by 58%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q2, Waters Corporation reported adjusted EPS of $3.05, up from $2.95 in the same quarter last year. This print beat analysts’ estimates by 1.4%. Over the next 12 months, Wall Street expects Waters Corporation’s full-year EPS to grow 14.8% from $13.68 to $15.70.

Key Takeaways from Waters Corporation’s Q2 Results

It was good to see Waters Corporation narrowly top analysts’ revenue expectations this quarter. On the other hand, its revenue guidance for next quarter was in line. Zooming out, we think this was a mixed quarter. The stock remained flat at $373.20 immediately following the results.

Big picture, is Waters Corporation a buy here and now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).