WATSCO INC (WSO) Stock Fundamental Analysis
NYSE:WSO - New York Stock Exchange, Inc. - US9426222009 - Common Stock - Currency: USD
WSO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 48 industry peers in the Trading Companies & Distributors industry. While WSO belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. WSO is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year WSO was profitable.
WSO had a positive operating cash flow in the past year.
WSO had positive earnings in each of the past 5 years.
Each year in the past 5 years WSO had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 10.44%, WSO belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
The Return On Equity of WSO (17.88%) is better than 70.83% of its industry peers.
Looking at the Return On Invested Capital, with a value of 16.15%, WSO belongs to the top of the industry, outperforming 89.58% 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 9.84%.
The last Return On Invested Capital (16.15%) 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 | 10.44% | ||
| 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
With a decent Profit Margin value of 6.58%, WSO is doing good in the industry, outperforming 68.75% of the companies in the same industry.
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 70.83% of the companies in the same industry.
In the last couple of years the Operating Margin of WSO has grown nicely.
With a Gross Margin value of 27.54%, WSO perfoms like the industry average, outperforming 41.67% of the companies in the same industry.
WSO's Gross Margin has improved in the last couple of years.
| 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
WSO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it 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.
Compared to 1 year ago, WSO has an improved debt to assets ratio.
2.2 Solvency
There is no outstanding debt for WSO. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.29 | ||
| Altman-Z | N/A |
ROIC/WACC1.64
WACC9.86%
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.
Looking at the Current ratio, with a value of 3.08, WSO is in the better half of the industry, outperforming 79.17% of the companies in the same industry.
A Quick Ratio of 1.26 indicates that WSO should not have too much problems paying its short term obligations.
WSO's Quick ratio of 1.26 is in line compared to the rest of the industry. WSO outperforms 52.08% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.08 | ||
| Quick Ratio | 1.26 |
3. Growth
3.1 Past
The earnings per share for WSO have decreased by -0.20% in the last year.
The Earnings Per Share has been growing by 15.67% on average over the past years. This is quite good.
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
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.
Based on estimates for the next years, WSO will show a quite strong growth in Revenue. The Revenue will grow by 8.09% on average per year.
EPS Next Y9.48%
EPS Next 2Y8.97%
EPS Next 3Y10.25%
EPS Next 5Y9.33%
Revenue Next Year4.93%
Revenue Next 2Y5.09%
Revenue Next 3Y5.37%
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
With a Price/Earnings ratio of 31.51, WSO can be considered very expensive at the moment.
Based on the Price/Earnings ratio, WSO is valued a bit more expensive than 62.50% of the companies in the same industry.
WSO is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.48, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 26.11 indicates a quite expensive valuation of WSO.
WSO's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. WSO is more expensive than 62.50% of the companies in the same industry.
WSO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 34.04, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.51 | ||
| Fwd PE | 26.11 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WSO is valued a bit more expensive than the industry average as 72.92% of the companies are valued more cheaply.
WSO's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 42.16 | ||
| EV/EBITDA | 21.01 |
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)3.32
PEG (5Y)2.01
EPS Next 2Y8.97%
EPS Next 3Y10.25%
5. Dividend
5.1 Amount
WSO has a Yearly Dividend Yield of 2.82%. 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 2.07. WSO pays more dividend than 91.67% of the companies in the same industry.
WSO's Dividend Yield is comparable with the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.82% |
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
WSO pays out 90.85% of its income as dividend. 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.
DP90.85%
EPS Next 2Y8.97%
EPS Next 3Y10.25%
410.83
-5.47 (-1.31%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners106.25%
Inst Owner Change-1.53%
Ins Owners0.38%
Ins Owner Change0%
Market Cap16.64B
Analysts67.62
Price Target483.86 (17.78%)
Short Float %7.2%
Short Ratio8.39
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.82% |
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)-2.99%
PT rev (3m)-2.9%
EPS NQ rev (1m)-4.53%
EPS NQ rev (3m)-6.7%
EPS NY rev (1m)0%
EPS NY rev (3m)-2.17%
Revenue NQ rev (1m)-2.67%
Revenue NQ rev (3m)-3.5%
Revenue NY rev (1m)-0.15%
Revenue NY rev (3m)-0.27%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.51 | ||
| Fwd PE | 26.11 | ||
| P/S | 2.22 | ||
| P/FCF | 42.16 | ||
| P/OCF | 39.02 | ||
| P/B | 6.03 | ||
| P/tB | 8.79 | ||
| EV/EBITDA | 21.01 |
EPS(TTM)13.04
EY3.17%
EPS(NY)15.74
Fwd EY3.83%
FCF(TTM)9.74
FCFY2.37%
OCF(TTM)10.53
OCFY2.56%
SpS185.33
BVpS68.14
TBVpS46.75
PEG (NY)3.32
PEG (5Y)2.01
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.44% | ||
| ROE | 17.88% | ||
| ROCE | 20.25% | ||
| ROIC | 16.15% | ||
| ROICexc | 17.56% | ||
| ROICexgc | 23.65% | ||
| OM | 9.87% | ||
| PM (TTM) | 6.58% | ||
| GM | 27.54% | ||
| FCFM | 5.26% |
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 | ||
| Debt/FCF | 0.29 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 74.77% | ||
| Cap/Sales | 0.42% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 54.44% | ||
| Profit Quality | 79.96% | ||
| Current Ratio | 3.08 | ||
| Quick Ratio | 1.26 | ||
| Altman-Z | N/A |
F-Score4
WACC9.86%
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 Y9.48%
EPS Next 2Y8.97%
EPS Next 3Y10.25%
EPS Next 5Y9.33%
Revenue 1Y (TTM)0.98%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-3.59%
Revenue Next Year4.93%
Revenue Next 2Y5.09%
Revenue Next 3Y5.37%
Revenue Next 5Y8.09%
EBIT growth 1Y1.38%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year10.75%
EBIT Next 3Y10%
EBIT Next 5Y9.41%
FCF growth 1Y4.65%
FCF growth 3Y31.86%
FCF growth 5Y18.5%
OCF growth 1Y4.11%
OCF growth 3Y30.29%
OCF growth 5Y18.15%