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Why WATSCO INC (NYSE:WSO) Deserves Consideration as a Quality Investment.

By Mill Chart

Last update: Dec 8, 2023

Quality investors are looking for the best of the best. Companies which are growing steadily and consistently, but are also in excellent financial condition. We will have a look here to see if WATSCO INC (NYSE:WSO) is suited for quality investing. Investors should of course do their own research, but we spotted WATSCO INC showing up in our Caviar Cruise quality screen, so it may be worth spending some more time on it.

Looking into the quality metrics of WATSCO INC

  • WATSCO INC has shown strong performance in revenue growth over the past 5 years, with a 10.87% increase. This indicates the company's ability to generate consistent revenue growth and reflects its potential for long-term success.
  • WATSCO INC demonstrates impressive performance in terms of ROIC excluding cash and goodwill, with a 34.09% ratio. This highlights the company's efficient utilization of capital and its focus on maximizing returns for investors.
  • With a Debt/Free Cash Flow Ratio of 0.49, WATSCO INC exhibits solid financial health and responsible debt management practices. This ratio indicates the company's ability to generate ample free cash flow to meet its debt obligations and pursue growth opportunities.
  • WATSCO INC demonstrates consistent Profit Quality over the past 5 years, with a strong 120.0%. This indicates the company's ability to generate sustainable and reliable profits, showcasing its long-term profitability and financial stability.
  • The 5-year EBIT growth of WATSCO INC has been remarkable, with 18.24% increase. This demonstrates the company's ability to improve its operational efficiency and indicates its competitiveness within the market.
  • With EBIT 5-year growth outpacing its Revenue 5-year growth, WATSCO INC showcases its effective cost management and enhanced operational performance. This suggests the company's ability to generate higher earnings from its revenue streams.

Zooming in on the fundamentals.

ChartMill assigns a Fundamental Rating to every stock. This score ranges from 0 to 10 and is updated daily. The score is determined by evaluating multiple fundamental indicators and properties.

We assign a fundamental rating of 6 out of 10 to WSO. WSO was compared to 52 industry peers in the Trading Companies & Distributors industry. WSO scores excellent points on both the profitability and health parts. This is a solid base for a good stock. WSO is valied quite expensively at the moment, while it does show a decent growth rate. These ratings would make WSO suitable for quality investing!

Check the latest full fundamental report of WSO for a complete fundamental analysis.

More quality stocks can be found in our Caviar Cruise screen.

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.

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WATSCO INC

NYSE:WSO (2/22/2024, 10:08:00 AM)

385.31

+5.44 (+1.43%)

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