WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
383.94 USD
-4.24 (-1.09%)
382.8 USD
-1.14 (-0.3%)
Overall WSO gets a fundamental rating of 6 out of 10. We evaluated WSO against 50 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.
1. Profitability
1.1 Basic Checks
- WSO had positive earnings in the past year.
- In the past year WSO had a positive cash flow from operations.
- Each year in the past 5 years WSO has been profitable.
- In the past 5 years WSO always reported a positive cash flow from operatings.
1.2 Ratios
- WSO's Return On Assets of 10.66% is amongst the best of the industry. WSO outperforms 82.00% of its industry peers.
- WSO's Return On Equity of 17.24% is fine compared to the rest of the industry. WSO outperforms 70.00% of its industry peers.
- With an excellent Return On Invested Capital value of 15.48%, WSO belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for WSO is significantly above the industry average of 9.64%.
- The last Return On Invested Capital (15.48%) for WSO is well below the 3 year average (20.81%), which needs to be investigated, but indicates that WSO had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.66% | ||
| ROE | 17.24% | ||
| ROIC | 15.48% |
ROA(3y)13.43%
ROA(5y)12.52%
ROE(3y)23.42%
ROE(5y)21.95%
ROIC(3y)20.81%
ROIC(5y)19.72%
1.3 Margins
- With a decent Profit Margin value of 6.55%, WSO is doing good in the industry, outperforming 68.00% of the companies in the same industry.
- In the last couple of years the Profit Margin of WSO has grown nicely.
- WSO has a Operating Margin of 9.80%. This is in the better half of the industry: WSO outperforms 68.00% of its industry peers.
- In the last couple of years the Operating Margin of WSO has grown nicely.
- WSO has a Gross Margin of 27.92%. This is comparable to the rest of the industry: WSO outperforms 46.00% of its industry peers.
- WSO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.8% | ||
| PM (TTM) | 6.55% | ||
| GM | 27.92% |
OM growth 3Y0.55%
OM growth 5Y5.7%
PM growth 3Y2.52%
PM growth 5Y6.73%
GM growth 3Y0.36%
GM growth 5Y2.05%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), WSO is creating value.
- The number of shares outstanding for WSO has been increased compared to 1 year ago.
- WSO has more shares outstanding than it did 5 years ago.
- WSO has a better debt/assets ratio than last year.
2.2 Solvency
- WSO has an Altman-Z score of 8.61. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
- The Altman-Z score of WSO (8.61) is better than 92.00% of its industry peers.
- WSO has a debt to FCF ratio of 0.02. This is a very positive value and a sign of high solvency as it would only need 0.02 years to pay back of all of its debts.
- WSO's Debt to FCF ratio of 0.02 is amongst the best of the industry. WSO outperforms 90.00% of its industry peers.
- A Debt/Equity ratio of 0.00 indicates that WSO is not too dependend on debt financing.
- WSO has a better Debt to Equity ratio (0.00) than 84.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 8.61 |
ROIC/WACC1.58
WACC9.82%
2.3 Liquidity
- A Current Ratio of 3.84 indicates that WSO has no problem at all paying its short term obligations.
- The Current ratio of WSO (3.84) is better than 86.00% of its industry peers.
- A Quick Ratio of 1.86 indicates that WSO should not have too much problems paying its short term obligations.
- Looking at the Quick ratio, with a value of 1.86, WSO is in the better half of the industry, outperforming 70.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.84 | ||
| Quick Ratio | 1.86 |
3. Growth
3.1 Past
- The earnings per share for WSO have decreased by -1.05% in the last year.
- The Earnings Per Share has been growing by 15.67% on average over the past years. This is quite good.
- The Revenue has decreased by -0.71% in the past year.
- WSO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.81% yearly.
EPS 1Y (TTM)-1.05%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%-5.69%
Revenue 1Y (TTM)-0.71%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-4.31%
3.2 Future
- The Earnings Per Share is expected to grow by 9.95% on average over the next years. This is quite good.
- WSO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.59% yearly.
EPS Next Y-6.04%
EPS Next 2Y0.01%
EPS Next 3Y2.86%
EPS Next 5Y9.95%
Revenue Next Year-3.46%
Revenue Next 2Y-0.03%
Revenue Next 3Y1.65%
Revenue Next 5Y3.59%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 30.00, the valuation of WSO can be described as expensive.
- The rest of the industry has a similar Price/Earnings ratio as WSO.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, WSO is valued at the same level.
- A Price/Forward Earnings ratio of 28.97 indicates a quite expensive valuation of WSO.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of WSO is on the same level as its industry peers.
- WSO's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 24.26.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30 | ||
| Fwd PE | 28.97 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, WSO is valued a bit more expensive than 64.00% of the companies in the same industry.
- WSO's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. WSO is cheaper than 66.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.09 | ||
| EV/EBITDA | 19.69 |
4.3 Compensation for Growth
- WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.91
EPS Next 2Y0.01%
EPS Next 3Y2.86%
5. Dividend
5.1 Amount
- WSO has a Yearly Dividend Yield of 3.19%. Purely for dividend investing, there may be better candidates out there.
- WSO's Dividend Yield is rather good when compared to the industry average which is at 1.48. WSO pays more dividend than 86.00% of the companies in the same industry.
- WSO's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.19% |
5.2 History
- The dividend of WSO is nicely growing with an annual growth rate of 11.05%!
- WSO has been paying a dividend for at least 10 years, so it has a reliable track record.
- WSO has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)11.05%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
- WSO pays out 95.01% of its income as dividend. This is not a sustainable payout ratio.
- WSO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP95.01%
EPS Next 2Y0.01%
EPS Next 3Y2.86%
WATSCO INC / WSO FAQ
What is the fundamental rating for WSO stock?
ChartMill assigns a fundamental rating of 6 / 10 to WSO.
Can you provide the valuation status for WATSCO INC?
ChartMill assigns a valuation rating of 3 / 10 to WATSCO INC (WSO). This can be considered as Overvalued.
What is the profitability of WSO stock?
WATSCO INC (WSO) has a profitability rating of 8 / 10.
What is the financial health of WATSCO INC (WSO) stock?
The financial health rating of WATSCO INC (WSO) is 8 / 10.
Is the dividend of WATSCO INC sustainable?
The dividend rating of WATSCO INC (WSO) is 6 / 10 and the dividend payout ratio is 95.01%.