WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
331.02 USD
-5.61 (-1.67%)
331.02 USD
0 (0%)
Overall WSO gets a fundamental rating of 7 out of 10. We evaluated WSO against 49 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. WSO is valied quite expensively at the moment, while it does show a decent growth rate. These ratings could make WSO a good candidate 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.
In the past 5 years WSO has always been profitable.
Each year in the past 5 years WSO had a positive operating cash flow.
1.2 Ratios
WSO has a better Return On Assets (10.66%) than 85.71% of its industry peers.
With a decent Return On Equity value of 17.24%, WSO is doing good in the industry, outperforming 71.43% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 15.48%, WSO belongs to the top of the industry, outperforming 91.84% 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 9.22%.
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
With a decent Profit Margin value of 6.55%, WSO is doing good in the industry, outperforming 71.43% of the companies in the same industry.
WSO's Profit Margin has improved in the last couple of years.
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.
The Gross Margin of WSO (27.92%) is comparable to the rest of the 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
WSO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for WSO has been increased compared to 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
WSO has an Altman-Z score of 7.81. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 7.81, WSO belongs to the top of the industry, outperforming 87.76% 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.
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.
WSO has a Debt/Equity ratio of 0.00. This is a healthy value indicating a solid balance between debt and equity.
WSO has a better Debt to Equity ratio (0.00) than 83.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 7.81 |
ROIC/WACC1.56
WACC9.91%
2.3 Liquidity
A Current Ratio of 3.84 indicates that WSO has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 3.84, WSO belongs to the top 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.
With a decent Quick ratio value of 1.86, WSO is doing good in the industry, outperforming 71.43% of the companies in the same industry.
| 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%.
Measured over the past years, WSO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.67% on average per year.
WSO shows a decrease in Revenue. In the last year, the revenue decreased by -0.71%.
The Revenue has been growing by 9.81% on average over the past years. This is quite good.
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.
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
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.
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
WSO is valuated quite expensively with a Price/Earnings ratio of 25.86.
WSO's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 25.65. WSO is around the same levels.
A Price/Forward Earnings ratio of 24.06 indicates a rather expensive valuation of WSO.
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 34.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.86 | ||
| Fwd PE | 24.06 |
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 61.22% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, WSO is valued a bit cheaper than the industry average as 69.39% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.94 | ||
| EV/EBITDA | 16.67 |
4.3 Compensation for Growth
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.65
EPS Next 2Y1.89%
EPS Next 3Y4.64%
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.
WSO's Dividend Yield is rather good when compared to the industry average which is at 2.08. WSO pays more dividend than 91.84% of the companies in the same industry.
WSO's Dividend Yield is a higher than the S&P500 average which is at 2.41.
| 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
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%
331.02
-5.61 (-1.67%)
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 Cap13.42B
Revenue(TTM)7.41B
Net Income(TTM)485.36M
Analysts65.71
Price Target417.56 (26.14%)
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 | 25.86 | ||
| Fwd PE | 24.06 | ||
| P/S | 1.81 | ||
| P/FCF | 25.94 | ||
| P/OCF | 24.46 | ||
| P/B | 4.77 | ||
| P/tB | 6.26 | ||
| EV/EBITDA | 16.67 |
EPS(TTM)12.8
EY3.87%
EPS(NY)13.76
Fwd EY4.16%
FCF(TTM)12.76
FCFY3.86%
OCF(TTM)13.53
OCFY4.09%
SpS182.85
BVpS69.42
TBVpS52.84
PEG (NY)N/A
PEG (5Y)1.65
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 | 7.81 |
F-Score6
WACC9.91%
ROIC/WACC1.56
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%.