WATSCO INC (WSO) Stock Fundamental Analysis
USA - NYSE:WSO - US9426222009 - Common Stock
325 USD
-10.84 (-3.23%)
We assign a fundamental rating of 6 out of 10 to WSO. WSO was compared to 50 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 quite expensive at the moment. It does show a decent growth rate. These ratings could make WSO a good candidate 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.
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
WSO's Return On Assets of 10.66% is amongst the best of the industry. WSO outperforms 86.00% of its industry peers.
WSO's Return On Equity of 17.24% is fine compared to the rest of the industry. WSO outperforms 72.00% of its industry peers.
WSO's Return On Invested Capital of 15.48% is amongst the best of the industry. WSO outperforms 92.00% of its industry peers.
The Average Return On Invested Capital over the past 3 years for WSO is significantly above the industry average of 9.31%.
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
Looking at the Profit Margin, with a value of 6.55%, WSO is in the better half of the industry, outperforming 72.00% of the companies in the same industry.
WSO's Profit Margin has improved in the last couple of years.
WSO has a Operating Margin of 9.80%. This is in the better half of the industry: WSO outperforms 72.00% of its industry peers.
WSO's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 27.92%, WSO perfoms like the industry average, outperforming 46.00% 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 | 9.8% | ||
| 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), WSO is creating value.
The number of shares outstanding for WSO has been increased compared to 1 year ago.
Compared to 5 years ago, WSO has more shares outstanding
WSO has a better debt/assets ratio than last year.
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 | 0.23 | ||
| Altman-Z | N/A |
ROIC/WACC1.77
WACC8.75%
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.
WSO has a better Current ratio (3.84) than 88.00% of its industry peers.
WSO has a Quick Ratio of 1.86. This is a normal value and indicates that WSO is financially healthy and should not expect problems in meeting its short term obligations.
WSO has a better Quick ratio (1.86) than 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%.
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 decrease in Revenue. The Revenue has decreased by -0.71% in the last year.
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.
WSO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.19% yearly.
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
The Price/Earnings ratio is 25.39, which means the current valuation is very expensive for WSO.
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 (25.47), we can say WSO is valued inline with the index average.
The Price/Forward Earnings ratio is 23.63, which indicates a rather expensive current valuation of WSO.
Compared to the rest of the industry, the Price/Forward Earnings ratio of WSO is on the same level as its industry peers.
WSO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 35.42, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.39 | ||
| Fwd PE | 23.63 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WSO is valued a bit more expensive than the industry average as 64.00% of the companies are valued more cheaply.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of WSO indicates a somewhat cheap valuation: WSO is cheaper than 68.00% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.45 | ||
| EV/EBITDA | 16.91 |
4.3 Compensation for Growth
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.62
EPS Next 2Y1.89%
EPS Next 3Y4.64%
5. Dividend
5.1 Amount
WSO has a Yearly Dividend Yield of 3.26%.
Compared to an average industry Dividend Yield of 2.04, WSO pays a better dividend. On top of this WSO pays more dividend than 92.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.44, WSO pays a bit more dividend than the S&P500 average.
| 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 95.00% 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.
DP95%
EPS Next 2Y1.89%
EPS Next 3Y4.64%
NYSE:WSO (11/20/2025, 3:39:03 PM)
325
-10.84 (-3.23%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners104.41%
Inst Owner Change2.77%
Ins Owners0.38%
Ins Owner Change0%
Market Cap13.18B
Revenue(TTM)7.41B
Net Income(TTM)485.37M
Analysts65.71
Price Target441.78 (35.93%)
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%
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)-6.44%
PT rev (3m)-8.7%
EPS NQ rev (1m)-22.72%
EPS NQ rev (3m)-23.91%
EPS NY rev (1m)-7.36%
EPS NY rev (3m)-12.21%
Revenue NQ rev (1m)-6.78%
Revenue NQ rev (3m)-8.02%
Revenue NY rev (1m)-2.55%
Revenue NY rev (3m)-7.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.39 | ||
| Fwd PE | 23.63 | ||
| P/S | 1.78 | ||
| P/FCF | 25.45 | ||
| P/OCF | 24.02 | ||
| P/B | 4.68 | ||
| P/tB | 6.79 | ||
| EV/EBITDA | 16.91 |
EPS(TTM)12.8
EY3.94%
EPS(NY)13.76
Fwd EY4.23%
FCF(TTM)12.77
FCFY3.93%
OCF(TTM)13.53
OCFY4.16%
SpS182.85
BVpS69.42
TBVpS47.89
PEG (NY)N/A
PEG (5Y)1.62
Graham Number141.39
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.66% | ||
| ROE | 17.24% | ||
| ROCE | 19.41% | ||
| ROIC | 15.48% | ||
| ROICexc | 18% | ||
| ROICexgc | 24.7% | ||
| 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 | 0.23 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 71.62% | ||
| Cap/Sales | 0.42% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 71.31% | ||
| Profit Quality | 106.69% | ||
| Current Ratio | 3.84 | ||
| Quick Ratio | 1.86 | ||
| Altman-Z | N/A |
F-Score6
WACC8.75%
ROIC/WACC1.77
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 1Y17.21%
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 6 / 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%.