WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
338.98 USD
-1.86 (-0.55%)
338.98 USD
0 (0%)
We assign a fundamental rating of 7 out of 10 to WSO. WSO was compared to 50 industry peers in the Trading Companies & Distributors industry. Both the health and profitability get an excellent rating, making WSO a very profitable company, without any liquidiy or solvency issues. While showing a medium growth rate, WSO is valued expensive at the moment. 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.
In the past year WSO had a positive cash flow from operations.
Each year in the past 5 years WSO has been profitable.
WSO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of WSO (10.66%) is better than 86.00% of its industry peers.
WSO has a Return On Equity of 17.24%. This is in the better half of the industry: WSO outperforms 72.00% of its industry peers.
Looking at the Return On Invested Capital, with a value of 15.48%, WSO belongs to the top of the industry, outperforming 92.00% of the companies in the same industry.
WSO had an Average Return On Invested Capital over the past 3 years of 20.81%. This is significantly above the industry average of 9.42%.
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
The Profit Margin of WSO (6.55%) is better than 70.00% of its industry peers.
In the last couple of years the Profit Margin of WSO has grown nicely.
WSO has a better Operating Margin (9.80%) than 70.00% of its industry peers.
WSO's Operating Margin has improved in the last couple of years.
The Gross Margin of WSO (27.92%) is comparable to the rest of the industry.
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.
WSO has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, WSO has more shares outstanding
Compared to 1 year ago, WSO has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 7.92 indicates that WSO is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 7.92, WSO belongs to the best of the industry, outperforming 88.00% of the companies in the same industry.
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 has a Debt to FCF ratio of 0.02. This is amongst the best in the industry. WSO outperforms 92.00% of its industry peers.
WSO has a Debt/Equity ratio of 0.00. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of WSO (0.00) is better than 86.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 7.92 |
ROIC/WACC1.55
WACC9.96%
2.3 Liquidity
A Current Ratio of 3.84 indicates that WSO has no problem at all paying its short term obligations.
WSO has a better Current ratio (3.84) than 90.00% of its industry peers.
A Quick Ratio of 1.86 indicates that WSO should not have too much problems paying its short term obligations.
WSO's Quick ratio of 1.86 is fine compared to the rest of the industry. WSO outperforms 72.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.84 | ||
| Quick Ratio | 1.86 |
3. Growth
3.1 Past
WSO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -1.05%.
WSO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.67% yearly.
WSO shows a decrease in Revenue. In the last year, the revenue decreased by -0.71%.
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
WSO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.57% yearly.
Based on estimates for the next years, WSO will show a quite strong growth in Revenue. The Revenue will grow by 8.19% on average per year.
EPS Next Y-6.04%
EPS Next 2Y0.29%
EPS Next 3Y3.15%
EPS Next 5Y11.57%
Revenue Next Year-3.47%
Revenue Next 2Y0.3%
Revenue Next 3Y1.8%
Revenue Next 5Y8.19%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
WSO is valuated quite expensively with a Price/Earnings ratio of 26.48.
WSO's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of WSO to the average of the S&P500 Index (26.28), we can say WSO is valued inline with the index average.
The Price/Forward Earnings ratio is 25.43, which means the current valuation is very expensive for WSO.
The rest of the industry has a similar Price/Forward Earnings ratio as WSO.
When comparing the Price/Forward Earnings ratio of WSO to the average of the S&P500 Index (23.52), we can say WSO is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.48 | ||
| Fwd PE | 25.43 |
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 62.00% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, WSO is valued a bit cheaper than 70.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.57 | ||
| EV/EBITDA | 17.09 |
4.3 Compensation for Growth
The excellent profitability rating of WSO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.69
EPS Next 2Y0.29%
EPS Next 3Y3.15%
5. Dividend
5.1 Amount
WSO has a Yearly Dividend Yield of 3.26%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 2.97, WSO pays a better dividend. On top of this WSO pays more dividend than 84.00% of the companies listed in the same industry.
WSO's Dividend Yield is a higher than the S&P500 average which is at 2.31.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.26% |
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 its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
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 around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP95.01%
EPS Next 2Y0.29%
EPS Next 3Y3.15%
338.98
-1.86 (-0.55%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners112.32%
Inst Owner Change3.13%
Ins Owners0.38%
Ins Owner Change0%
Market Cap13.75B
Revenue(TTM)7.41B
Net Income(TTM)485.36M
Analysts66
Price Target417.56 (23.18%)
Short Float %8.8%
Short Ratio6.02
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)-5.48%
PT rev (3m)-12.78%
EPS NQ rev (1m)-0.48%
EPS NQ rev (3m)-23.64%
EPS NY rev (1m)-2.25%
EPS NY rev (3m)-10.14%
Revenue NQ rev (1m)-0.67%
Revenue NQ rev (3m)-8.23%
Revenue NY rev (1m)-1.06%
Revenue NY rev (3m)-4.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.48 | ||
| Fwd PE | 25.43 | ||
| P/S | 1.85 | ||
| P/FCF | 26.57 | ||
| P/OCF | 25.06 | ||
| P/B | 4.88 | ||
| P/tB | 6.42 | ||
| EV/EBITDA | 17.09 |
EPS(TTM)12.8
EY3.78%
EPS(NY)13.33
Fwd EY3.93%
FCF(TTM)12.76
FCFY3.76%
OCF(TTM)13.53
OCFY3.99%
SpS182.8
BVpS69.4
TBVpS52.83
PEG (NY)N/A
PEG (5Y)1.69
Graham Number141.38
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 | 7.92 |
F-Score6
WACC9.96%
ROIC/WACC1.55
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-6.04%
EPS Next 2Y0.29%
EPS Next 3Y3.15%
EPS Next 5Y11.57%
Revenue 1Y (TTM)-0.71%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-4.31%
Revenue Next Year-3.47%
Revenue Next 2Y0.3%
Revenue Next 3Y1.8%
Revenue Next 5Y8.19%
EBIT growth 1Y0.38%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year-0.44%
EBIT Next 3Y6.2%
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 -6.04% 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%.