WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
346.4 USD
+0.8 (+0.23%)
346.4 USD
0 (0%)
Taking everything into account, WSO scores 7 out of 10 in our fundamental rating. WSO was compared to 49 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. While showing a medium growth rate, WSO is valued expensive at the moment. This makes WSO very considerable for quality investing!
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.
Each year in the past 5 years WSO had a positive operating cash flow.
1.2 Ratios
The Return On Assets of WSO (10.66%) is better than 85.71% of its industry peers.
WSO has a better Return On Equity (17.24%) than 71.43% of its industry peers.
WSO has a better Return On Invested Capital (15.48%) than 91.84% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for WSO is significantly above the industry average of 9.22%.
The 3 year average ROIC (20.81%) for WSO is well above the current ROIC(15.48%). The reason for the recent decline needs to be investigated.
| 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
WSO's Profit Margin of 6.55% is fine compared to the rest of the industry. WSO outperforms 71.43% of its industry peers.
In the last couple of years the Profit Margin of WSO has grown nicely.
WSO's Operating Margin of 9.80% is fine compared to the rest of the industry. WSO outperforms 69.39% of its industry peers.
WSO's Operating Margin has improved in the last couple of years.
WSO has a Gross Margin of 27.92%. This is comparable to the rest of the industry: WSO outperforms 44.90% 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 5Y6.74%
GM growth 3Y0.36%
GM growth 5Y2.05%
2. Health
2.1 Basic Checks
WSO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it 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.
WSO has a better debt/assets ratio than last year.
2.2 Solvency
WSO has an Altman-Z score of 8.01. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of WSO (8.01) is better than 87.76% 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.
With an excellent Debt to FCF ratio value of 0.02, WSO belongs to the best of the industry, outperforming 91.84% of the companies in the same industry.
A Debt/Equity ratio of 0.00 indicates that WSO is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.00, WSO belongs to the top of the industry, outperforming 83.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 8.01 |
ROIC/WACC1.54
WACC10.08%
2.3 Liquidity
WSO has a Current Ratio of 3.84. This indicates that WSO is financially healthy and has no problem in meeting its short term obligations.
With an excellent Current ratio value of 3.84, WSO belongs to the best of the industry, outperforming 89.80% of the companies in the same industry.
A Quick Ratio of 1.86 indicates that WSO should not have too much problems paying its short term obligations.
The Quick ratio of WSO (1.86) is better than 71.43% of its industry peers.
| 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.
Measured over the past years, WSO shows a quite strong growth in Revenue. The Revenue has been growing by 9.81% on average per year.
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
Based on estimates for the next years, WSO will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.57% on average per year.
The Revenue is expected to grow by 8.19% on average over the next years. This is quite good.
EPS Next Y-3.88%
EPS Next 2Y1.89%
EPS Next 3Y4.64%
EPS Next 5Y11.57%
Revenue Next Year-2.43%
Revenue Next 2Y1.25%
Revenue Next 3Y2.49%
Revenue Next 5Y8.19%
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 stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 27.06, WSO can be considered very expensive at the moment.
WSO's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of WSO to the average of the S&P500 Index (26.31), we can say WSO is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 25.18, the valuation of WSO can be described as expensive.
WSO's Price/Forward Earnings is on the same level as the industry average.
WSO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 36.59.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.06 | ||
| Fwd PE | 25.18 |
4.2 Price Multiples
63.27% 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 a bit cheaper when compared to the industry. WSO is cheaper than 69.39% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 27.15 | ||
| EV/EBITDA | 17.44 |
4.3 Compensation for Growth
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.73
EPS Next 2Y1.89%
EPS Next 3Y4.64%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.26%, WSO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.97, WSO pays a better dividend. On top of this WSO pays more dividend than 91.84% of the companies listed in the same industry.
WSO's Dividend Yield is a higher than the S&P500 average which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.26% |
5.2 History
On average, the dividend of WSO grows each year by 11.05%, which is quite nice.
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
95.01% of the earnings are spent on dividend by WSO. This is not a sustainable payout ratio.
WSO's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP95.01%
EPS Next 2Y1.89%
EPS Next 3Y4.64%
346.4
+0.8 (+0.23%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners104.41%
Inst Owner Change3.11%
Ins Owners0.38%
Ins Owner Change0%
Market Cap14.05B
Revenue(TTM)7.41B
Net Income(TTM)485.36M
Analysts65.71
Price Target417.56 (20.54%)
Short Float %8.38%
Short Ratio5.44
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.26% |
Yearly Dividend9.55
Dividend Growth(5Y)11.05%
DP95.01%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-6.38%
Min EPS beat(2)-6.66%
Max EPS beat(2)-6.09%
EPS beat(4)1
Avg EPS beat(4)-4.57%
Min EPS beat(4)-15.33%
Max EPS beat(4)9.8%
EPS beat(8)1
Avg EPS beat(8)-7.02%
EPS beat(12)4
Avg EPS beat(12)1.45%
EPS beat(16)6
Avg EPS beat(16)5.32%
Revenue beat(2)0
Avg Revenue beat(2)-6.6%
Min Revenue beat(2)-8.58%
Max Revenue beat(2)-4.61%
Revenue beat(4)1
Avg Revenue beat(4)-4.31%
Min Revenue beat(4)-8.58%
Max Revenue beat(4)4.34%
Revenue beat(8)1
Avg Revenue beat(8)-3.93%
Revenue beat(12)2
Avg Revenue beat(12)-3.5%
Revenue beat(16)4
Avg Revenue beat(16)-1.61%
PT rev (1m)-11.57%
PT rev (3m)-13.32%
EPS NQ rev (1m)-18.01%
EPS NQ rev (3m)-23.42%
EPS NY rev (1m)-3.09%
EPS NY rev (3m)-8.07%
Revenue NQ rev (1m)-5.56%
Revenue NQ rev (3m)-8.6%
Revenue NY rev (1m)-1.28%
Revenue NY rev (3m)-3.61%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.06 | ||
| Fwd PE | 25.18 | ||
| P/S | 1.89 | ||
| P/FCF | 27.15 | ||
| P/OCF | 25.6 | ||
| P/B | 4.99 | ||
| P/tB | 6.56 | ||
| EV/EBITDA | 17.44 |
EPS(TTM)12.8
EY3.7%
EPS(NY)13.76
Fwd EY3.97%
FCF(TTM)12.76
FCFY3.68%
OCF(TTM)13.53
OCFY3.91%
SpS182.85
BVpS69.42
TBVpS52.84
PEG (NY)N/A
PEG (5Y)1.73
Graham Number141.39
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.66% | ||
| ROE | 17.24% | ||
| ROCE | 19.41% | ||
| ROIC | 15.48% | ||
| ROICexc | 18% | ||
| ROICexgc | 22.75% | ||
| OM | 9.8% | ||
| PM (TTM) | 6.55% | ||
| GM | 27.92% | ||
| FCFM | 6.98% |
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%
ROICexgc growth 3Y-0.91%
ROICexgc 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-Score6
Asset Turnover1.63
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Debt/EBITDA | 0.02 | ||
| Cap/Depr | 72.48% | ||
| Cap/Sales | 0.42% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 71.31% | ||
| Profit Quality | 106.61% | ||
| Current Ratio | 3.84 | ||
| Quick Ratio | 1.86 | ||
| Altman-Z | 8.01 |
F-Score6
WACC10.08%
ROIC/WACC1.54
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)-1.05%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%-5.69%
EPS Next Y-3.88%
EPS Next 2Y1.89%
EPS Next 3Y4.64%
EPS Next 5Y11.57%
Revenue 1Y (TTM)-0.71%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-4.31%
Revenue Next Year-2.43%
Revenue Next 2Y1.25%
Revenue Next 3Y2.49%
Revenue Next 5Y8.19%
EBIT growth 1Y0.38%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year9.21%
EBIT Next 3Y10.63%
EBIT Next 5Y10.74%
FCF growth 1Y17.12%
FCF growth 3Y31.86%
FCF growth 5Y18.5%
OCF growth 1Y15.18%
OCF growth 3Y30.29%
OCF growth 5Y18.15%
WATSCO INC / WSO FAQ
What is the fundamental rating for WSO stock?
ChartMill assigns a fundamental rating of 7 / 10 to WSO.
What is the valuation status for WSO stock?
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 earnings growth outlook for WATSCO INC?
The Earnings per Share (EPS) of WATSCO INC (WSO) is expected to decline by -3.88% in the next year.
How sustainable is the dividend of WATSCO INC (WSO) stock?
The dividend rating of WATSCO INC (WSO) is 6 / 10 and the dividend payout ratio is 95.01%.