WATSCO INC (WSO) Stock Fundamental Analysis
NYSE:WSO - New York Stock Exchange, Inc. - US9426222009 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to WSO. WSO was compared to 48 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. With these ratings, WSO could be worth investigating further for quality investing!.
1. Profitability
1.1 Basic Checks
In the past year WSO was profitable.
WSO had a positive operating cash flow in the past year.
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 11.02% is amongst the best of the industry. WSO outperforms 91.67% of its industry peers.
WSO has a better Return On Equity (18.42%) than 72.92% of its industry peers.
Looking at the Return On Invested Capital, with a value of 16.66%, WSO belongs to the top of the industry, outperforming 89.58% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for WSO is significantly above the industry average of 9.62%.
The 3 year average ROIC (20.81%) for WSO is well above the current ROIC(16.66%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.02% | ||
| ROE | 18.42% | ||
| ROIC | 16.66% |
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 (6.47%) than 75.00% of its industry peers.
WSO's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 9.72%, WSO is in the better half of the industry, outperforming 70.83% of the companies in the same industry.
WSO's Operating Margin has improved in the last couple of years.
WSO's Gross Margin of 26.95% is in line compared to the rest of the industry. WSO outperforms 41.67% of its industry peers.
In the last couple of years the Gross Margin of WSO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.72% | ||
| PM (TTM) | 6.47% | ||
| GM | 26.95% |
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.
WSO has more shares outstanding than it did 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 9.60. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of WSO (9.60) is better than 93.75% of its industry peers.
The Debt to FCF ratio of WSO is 0.03, which is an excellent value as it means it would take WSO, only 0.03 years of fcf income to pay off all of its debts.
WSO has a better Debt to FCF ratio (0.03) than 91.67% 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.
WSO has a Debt to Equity ratio of 0.01. This is amongst the best in the industry. WSO outperforms 85.42% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.03 | ||
| Altman-Z | 9.6 |
ROIC/WACC1.62
WACC10.3%
2.3 Liquidity
A Current Ratio of 3.28 indicates that WSO has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 3.28, WSO is in the better half of the industry, outperforming 79.17% of the companies in the same industry.
WSO has a Quick Ratio of 1.36. This is a normal value and indicates that WSO is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of WSO (1.36) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.28 | ||
| Quick Ratio | 1.36 |
3. Growth
3.1 Past
WSO shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 0.08%.
WSO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.67% yearly.
Looking at the last year, WSO shows a small growth in Revenue. The Revenue has grown by 3.92% 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)0.08%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%-11.06%
Revenue 1Y (TTM)3.92%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-2.17%
3.2 Future
Based on estimates for the next years, WSO will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.33% on average per year.
WSO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.09% yearly.
EPS Next Y9.48%
EPS Next 2Y8.97%
EPS Next 3Y10.25%
EPS Next 5Y9.33%
Revenue Next Year5.08%
Revenue Next 2Y5.19%
Revenue Next 3Y5.4%
Revenue Next 5Y8.09%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 36.19 indicates a quite expensive valuation of WSO.
Based on the Price/Earnings ratio, WSO is valued a bit more expensive than 62.50% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.41, WSO is valued a bit more expensive.
With a Price/Forward Earnings ratio of 29.92, WSO can be considered very expensive at the moment.
Based on the Price/Forward Earnings ratio, WSO is valued a bit more expensive than the industry average as 68.75% of the companies are valued more cheaply.
When comparing the Price/Forward Earnings ratio of WSO to the average of the S&P500 Index (35.19), we can say WSO is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.19 | ||
| Fwd PE | 29.92 |
4.2 Price Multiples
75.00% of the companies in the same industry are cheaper than WSO, based on the Enterprise Value to EBITDA ratio.
WSO's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 41.47 | ||
| EV/EBITDA | 24.05 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates WSO does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of WSO may justify a higher PE ratio.
PEG (NY)3.82
PEG (5Y)2.31
EPS Next 2Y8.97%
EPS Next 3Y10.25%
5. Dividend
5.1 Amount
WSO has a Yearly Dividend Yield of 2.52%.
Compared to an average industry Dividend Yield of 2.01, WSO pays a better dividend. On top of this WSO pays more dividend than 91.67% of the companies listed in the same industry.
WSO's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.52% |
5.2 History
The dividend of WSO is nicely growing with an annual growth rate of 11.05%!
WSO has paid a dividend for at least 10 years, which is 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
88.76% of the earnings are spent on dividend by WSO. This is not a sustainable payout ratio.
The dividend of WSO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP88.76%
EPS Next 2Y8.97%
EPS Next 3Y10.25%
NYSE:WSO (7/14/2025, 2:16:57 PM)
470.87
+0.82 (+0.17%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners106.27%
Inst Owner Change-0.09%
Ins Owners0.39%
Ins Owner Change0%
Market Cap19.07B
Analysts67.62
Price Target498.78 (5.93%)
Short Float %6.91%
Short Ratio7.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.52% |
Yearly Dividend9.55
Dividend Growth(5Y)11.05%
DP88.76%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-2.77%
Min EPS beat(2)-15.33%
Max EPS beat(2)9.8%
EPS beat(4)1
Avg EPS beat(4)-5.58%
Min EPS beat(4)-15.33%
Max EPS beat(4)9.8%
EPS beat(8)2
Avg EPS beat(8)-6.76%
EPS beat(12)4
Avg EPS beat(12)1.51%
EPS beat(16)8
Avg EPS beat(16)7.52%
Revenue beat(2)1
Avg Revenue beat(2)-2.02%
Min Revenue beat(2)-8.37%
Max Revenue beat(2)4.34%
Revenue beat(4)1
Avg Revenue beat(4)-2.92%
Min Revenue beat(4)-8.37%
Max Revenue beat(4)4.34%
Revenue beat(8)2
Avg Revenue beat(8)-3.1%
Revenue beat(12)2
Avg Revenue beat(12)-2.76%
Revenue beat(16)5
Avg Revenue beat(16)3.76%
PT rev (1m)0%
PT rev (3m)-3.06%
EPS NQ rev (1m)0.06%
EPS NQ rev (3m)-0.89%
EPS NY rev (1m)-0.06%
EPS NY rev (3m)-2.47%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.78%
Revenue NY rev (1m)-0.16%
Revenue NY rev (3m)-2.08%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.19 | ||
| Fwd PE | 29.92 | ||
| P/S | 2.52 | ||
| P/FCF | 41.47 | ||
| P/OCF | 38.79 | ||
| P/B | 7.16 | ||
| P/tB | 9.52 | ||
| EV/EBITDA | 24.05 |
EPS(TTM)13.01
EY2.76%
EPS(NY)15.74
Fwd EY3.34%
FCF(TTM)11.35
FCFY2.41%
OCF(TTM)12.14
OCFY2.58%
SpS187.22
BVpS65.79
TBVpS49.44
PEG (NY)3.82
PEG (5Y)2.31
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.02% | ||
| ROE | 18.42% | ||
| ROCE | 20.89% | ||
| ROIC | 16.66% | ||
| ROICexc | 18.98% | ||
| ROICexgc | 24.14% | ||
| OM | 9.72% | ||
| PM (TTM) | 6.47% | ||
| GM | 26.95% | ||
| FCFM | 6.06% |
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-Score7
Asset Turnover1.7
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.03 | ||
| Debt/EBITDA | 0.02 | ||
| Cap/Depr | 76.19% | ||
| Cap/Sales | 0.42% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 63.13% | ||
| Profit Quality | 93.69% | ||
| Current Ratio | 3.28 | ||
| Quick Ratio | 1.36 | ||
| Altman-Z | 9.6 |
F-Score7
WACC10.3%
ROIC/WACC1.62
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)0.08%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%-11.06%
EPS Next Y9.48%
EPS Next 2Y8.97%
EPS Next 3Y10.25%
EPS Next 5Y9.33%
Revenue 1Y (TTM)3.92%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-2.17%
Revenue Next Year5.08%
Revenue Next 2Y5.19%
Revenue Next 3Y5.4%
Revenue Next 5Y8.09%
EBIT growth 1Y1.18%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year14.6%
EBIT Next 3Y10.81%
EBIT Next 5Y9.41%
FCF growth 1Y-22.22%
FCF growth 3Y31.86%
FCF growth 5Y18.5%
OCF growth 1Y-21.47%
OCF growth 3Y30.29%
OCF growth 5Y18.15%