WATSCO INC (WSO) Stock Fundamental Analysis
USA - NYSE:WSO - US9426222009 - Common Stock
391.33 USD
+0.68 (+0.17%)
WSO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 49 industry peers in the Trading Companies & Distributors industry. WSO gets an excellent profitability rating and is at the same time showing great financial health properties. 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.
WSO had a positive operating cash flow in the past year.
WSO had positive earnings in each of the past 5 years.
In the past 5 years WSO always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 10.44%, WSO belongs to the top of the industry, outperforming 87.76% of the companies in the same industry.
Looking at the Return On Equity, with a value of 17.88%, WSO is in the better half of the industry, outperforming 71.43% of the companies in the same industry.
WSO's Return On Invested Capital of 16.15% is amongst the best of the industry. WSO outperforms 89.80% of its industry peers.
WSO had an Average Return On Invested Capital over the past 3 years of 20.81%. This is significantly above the industry average of 10.06%.
The 3 year average ROIC (20.81%) for WSO is well above the current ROIC(16.15%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.44% | ||
| ROE | 17.88% | ||
| ROIC | 16.15% |
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
WSO has a better Profit Margin (6.58%) than 71.43% of its industry peers.
WSO's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 9.87%, WSO is doing good in the industry, outperforming 71.43% of the companies in the same industry.
WSO's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 27.54%, WSO is in line with its industry, outperforming 44.90% of the companies in the same industry.
In the last couple of years the Gross Margin of WSO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.87% | ||
| PM (TTM) | 6.58% | ||
| GM | 27.54% |
OM growth 3Y0.55%
OM growth 5Y5.7%
PM growth 3Y2.52%
PM growth 5Y6.74%
GM growth 3Y0.36%
GM growth 5Y2.05%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so WSO is creating value.
Compared to 1 year ago, WSO has more shares outstanding
The number of shares outstanding for WSO has been increased compared to 5 years ago.
The debt/assets ratio for WSO has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 7.89 indicates that WSO is not in any danger for bankruptcy at the moment.
The Altman-Z score of WSO (7.89) is better than 91.84% of its industry peers.
The Debt to FCF ratio of WSO is 0.04, which is an excellent value as it means it would take WSO, only 0.04 years of fcf income to pay off all of its debts.
WSO has a Debt to FCF ratio of 0.04. This is amongst the best in the industry. WSO outperforms 91.84% of its industry peers.
WSO has a Debt/Equity ratio of 0.01. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of WSO (0.01) is better than 87.76% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.04 | ||
| Altman-Z | 7.89 |
ROIC/WACC1.64
WACC9.83%
2.3 Liquidity
WSO has a Current Ratio of 3.08. This indicates that WSO is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of WSO (3.08) is better than 81.63% of its industry peers.
WSO has a Quick Ratio of 1.26. This is a normal value and indicates that WSO is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.26, WSO is in line with its industry, outperforming 51.02% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.08 | ||
| Quick Ratio | 1.26 |
3. Growth
3.1 Past
WSO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -0.20%.
Measured over the past years, WSO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.67% on average per year.
Looking at the last year, WSO shows a small growth in Revenue. The Revenue has grown by 0.98% in the last year.
The Revenue has been growing by 9.81% on average over the past years. This is quite good.
EPS 1Y (TTM)-0.2%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%0.76%
Revenue 1Y (TTM)0.98%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-3.59%
3.2 Future
WSO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.39% yearly.
The Revenue is expected to grow by 6.81% on average over the next years.
EPS Next Y4.56%
EPS Next 2Y6.11%
EPS Next 3Y8.53%
EPS Next 5Y11.39%
Revenue Next Year0.74%
Revenue Next 2Y3.32%
Revenue Next 3Y4.31%
Revenue Next 5Y6.81%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 30.01, WSO can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of WSO is on the same level as its industry peers.
WSO is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.29, which is the current average of the S&P500 Index.
WSO is valuated quite expensively with a Price/Forward Earnings ratio of 26.23.
63.27% of the companies in the same industry are cheaper than WSO, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 22.80. WSO is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.01 | ||
| Fwd PE | 26.23 |
4.2 Price Multiples
WSO's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. WSO is more expensive than 65.31% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of WSO is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 40.24 | ||
| EV/EBITDA | 20.01 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)6.58
PEG (5Y)1.92
EPS Next 2Y6.11%
EPS Next 3Y8.53%
5. Dividend
5.1 Amount
WSO has a Yearly Dividend Yield of 2.97%. 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 1.72. WSO pays more dividend than 93.88% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, WSO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.97% |
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 90.85% of its income as dividend. This is not a sustainable payout ratio.
The dividend of WSO is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP90.85%
EPS Next 2Y6.11%
EPS Next 3Y8.53%
NYSE:WSO (9/25/2025, 1:00:28 PM)
391.33
+0.68 (+0.17%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners106.25%
Inst Owner Change-2.63%
Ins Owners0.38%
Ins Owner Change0%
Market Cap15.87B
Analysts67.62
Price Target478.76 (22.34%)
Short Float %7.11%
Short Ratio6.79
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.97% |
Yearly Dividend9.55
Dividend Growth(5Y)11.05%
DP90.85%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-11%
Min EPS beat(2)-15.33%
Max EPS beat(2)-6.66%
EPS beat(4)1
Avg EPS beat(4)-5.97%
Min EPS beat(4)-15.33%
Max EPS beat(4)9.8%
EPS beat(8)2
Avg EPS beat(8)-6.2%
EPS beat(12)4
Avg EPS beat(12)1.23%
EPS beat(16)7
Avg EPS beat(16)5.84%
Revenue beat(2)0
Avg Revenue beat(2)-8.48%
Min Revenue beat(2)-8.58%
Max Revenue beat(2)-8.37%
Revenue beat(4)1
Avg Revenue beat(4)-4.32%
Min Revenue beat(4)-8.58%
Max Revenue beat(4)4.34%
Revenue beat(8)2
Avg Revenue beat(8)-3%
Revenue beat(12)2
Avg Revenue beat(12)-3.22%
Revenue beat(16)4
Avg Revenue beat(16)-1.53%
PT rev (1m)-1.05%
PT rev (3m)-4.01%
EPS NQ rev (1m)-0.62%
EPS NQ rev (3m)-5.97%
EPS NY rev (1m)0%
EPS NY rev (3m)-4.66%
Revenue NQ rev (1m)-0.62%
Revenue NQ rev (3m)-4.16%
Revenue NY rev (1m)-0.48%
Revenue NY rev (3m)-4.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.01 | ||
| Fwd PE | 26.23 | ||
| P/S | 2.11 | ||
| P/FCF | 40.24 | ||
| P/OCF | 37.2 | ||
| P/B | 5.75 | ||
| P/tB | 7.61 | ||
| EV/EBITDA | 20.01 |
EPS(TTM)13.04
EY3.33%
EPS(NY)14.92
Fwd EY3.81%
FCF(TTM)9.73
FCFY2.49%
OCF(TTM)10.52
OCFY2.69%
SpS185.14
BVpS68.08
TBVpS51.41
PEG (NY)6.58
PEG (5Y)1.92
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.44% | ||
| ROE | 17.88% | ||
| ROCE | 20.25% | ||
| ROIC | 16.15% | ||
| ROICexc | 17.56% | ||
| ROICexgc | 21.97% | ||
| OM | 9.87% | ||
| PM (TTM) | 6.58% | ||
| GM | 27.54% | ||
| FCFM | 5.25% |
ROA(3y)13.43%
ROA(5y)12.52%
ROE(3y)23.42%
ROE(5y)21.95%
ROIC(3y)20.81%
ROIC(5y)19.72%
ROICexc(3y)23.47%
ROICexc(5y)21.78%
ROICexgc(3y)31.07%
ROICexgc(5y)29.54%
ROCE(3y)26.1%
ROCE(5y)24.73%
ROICexcg growth 3Y-0.91%
ROICexcg growth 5Y8.07%
ROICexc growth 3Y0.61%
ROICexc growth 5Y9.42%
OM growth 3Y0.55%
OM growth 5Y5.7%
PM growth 3Y2.52%
PM growth 5Y6.74%
GM growth 3Y0.36%
GM growth 5Y2.05%
F-Score4
Asset Turnover1.59
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.04 | ||
| Debt/EBITDA | 0.02 | ||
| Cap/Depr | 75.57% | ||
| Cap/Sales | 0.43% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 54.44% | ||
| Profit Quality | 79.89% | ||
| Current Ratio | 3.08 | ||
| Quick Ratio | 1.26 | ||
| Altman-Z | 7.89 |
F-Score4
WACC9.83%
ROIC/WACC1.64
Cap/Depr(3y)95.78%
Cap/Depr(5y)88.24%
Cap/Sales(3y)0.46%
Cap/Sales(5y)0.42%
Profit Quality(3y)117.3%
Profit Quality(5y)129.41%
High Growth Momentum
Growth
EPS 1Y (TTM)-0.2%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%0.76%
EPS Next Y4.56%
EPS Next 2Y6.11%
EPS Next 3Y8.53%
EPS Next 5Y11.39%
Revenue 1Y (TTM)0.98%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-3.59%
Revenue Next Year0.74%
Revenue Next 2Y3.32%
Revenue Next 3Y4.31%
Revenue Next 5Y6.81%
EBIT growth 1Y1.38%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year10.75%
EBIT Next 3Y10%
EBIT Next 5Y11.17%
FCF growth 1Y4.56%
FCF growth 3Y31.86%
FCF growth 5Y18.5%
OCF growth 1Y4.11%
OCF growth 3Y30.29%
OCF growth 5Y18.15%