WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
336.63 USD
+13.12 (+4.06%)
336.63 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. 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
WSO had positive earnings in the past year.
WSO had a positive operating cash flow in the past year.
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's Return On Assets of 10.66% is amongst the best of the industry. WSO outperforms 85.71% of its industry peers.
Looking at the Return On Equity, with a value of 17.24%, WSO is in the better half of the industry, outperforming 71.43% of the companies in the same industry.
WSO's Return On Invested Capital of 15.48% is amongst the best of the industry. WSO outperforms 91.84% of its industry peers.
The Average Return On Invested Capital over the past 3 years for WSO is significantly above the industry average of 9.22%.
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
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.
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.
In the last couple of years the Operating Margin of WSO has grown nicely.
With a Gross Margin value of 27.92%, WSO perfoms like the industry average, outperforming 44.90% 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.
Compared to 1 year ago, WSO has more shares outstanding
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
WSO has an Altman-Z score of 7.89. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
WSO has a Altman-Z score of 7.89. This is amongst the best in the industry. WSO outperforms 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.
The Debt to FCF ratio of WSO (0.02) is better than 91.84% 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 83.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 7.89 |
ROIC/WACC1.56
WACC9.91%
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.
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 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.
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.
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
A Price/Earnings ratio of 26.30 indicates a quite expensive valuation of 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 24.47, which indicates a rather expensive current valuation of WSO.
The rest of the industry has a similar Price/Forward Earnings ratio as WSO.
The average S&P500 Price/Forward Earnings ratio is at 34.42. WSO is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.3 | ||
| Fwd PE | 24.47 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WSO is valued a bit more expensive than 61.22% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of WSO indicates a somewhat cheap valuation: WSO is cheaper than 69.39% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.38 | ||
| EV/EBITDA | 16.96 |
4.3 Compensation for Growth
The excellent profitability rating of WSO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.68
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 paid a dividend for at least 10 years, which is 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 2Y1.89%
EPS Next 3Y4.64%
336.63
+13.12 (+4.06%)
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 Cap13.65B
Revenue(TTM)7.41B
Net Income(TTM)485.36M
Analysts65.71
Price Target417.56 (24.04%)
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 | 26.3 | ||
| Fwd PE | 24.47 | ||
| P/S | 1.84 | ||
| P/FCF | 26.38 | ||
| P/OCF | 24.88 | ||
| P/B | 4.85 | ||
| P/tB | 6.37 | ||
| EV/EBITDA | 16.96 |
EPS(TTM)12.8
EY3.8%
EPS(NY)13.76
Fwd EY4.09%
FCF(TTM)12.76
FCFY3.79%
OCF(TTM)13.53
OCFY4.02%
SpS182.85
BVpS69.42
TBVpS52.84
PEG (NY)N/A
PEG (5Y)1.68
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 | 7.89 |
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%.