WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
346.4 USD
+0.8 (+0.23%)
346.4 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. WSO gets an excellent profitability rating and is at the same time showing great financial health properties. WSO is valied quite expensively at the moment, while it does show a decent growth rate. These ratings would make WSO suitable 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.
Each year in the past 5 years WSO has 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.
WSO has a Return On Equity of 17.24%. This is in the better half of the industry: WSO outperforms 71.43% of its industry peers.
The Return On Invested Capital of WSO (15.48%) is better than 91.84% of its industry peers.
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 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
WSO has a better Profit Margin (6.55%) than 71.43% of its industry peers.
WSO's Profit Margin has improved in the last couple of years.
WSO has a better Operating Margin (9.80%) than 69.39% of its industry peers.
In the last couple of years the Operating Margin of WSO has grown nicely.
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), WSO is creating value.
WSO has more shares outstanding than it did 1 year ago.
The number of shares outstanding for WSO has been increased compared to 5 years ago.
Compared to 1 year ago, WSO has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 8.01 indicates that WSO is not in any danger for bankruptcy at the moment.
The Altman-Z score of WSO (8.01) is better than 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.
WSO has a better Debt to FCF ratio (0.02) 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.
With an excellent Debt to Equity ratio value of 0.00, WSO belongs to the best of the industry, outperforming 83.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 8.01 |
ROIC/WACC1.54
WACC10.06%
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.
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%.
WSO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.67% yearly.
The Revenue has decreased by -0.71% in the past year.
Measured over the past years, WSO shows a quite strong growth in Revenue. The Revenue has been growing by 9.81% on average per year.
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
Based on estimates for the next years, WSO will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.57% on average per year.
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
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
A Price/Earnings ratio of 27.06 indicates a quite expensive valuation of WSO.
Compared to the rest of the industry, the Price/Earnings ratio of WSO is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 26.31, WSO is valued at the same level.
Based on the Price/Forward Earnings ratio of 25.18, the valuation of WSO can be described as expensive.
WSO's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 36.59. WSO is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.06 | ||
| Fwd PE | 25.18 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of WSO indicates a slightly more expensive valuation: WSO is more expensive than 63.27% of the companies listed 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 | 27.15 | ||
| EV/EBITDA | 17.44 |
4.3 Compensation for Growth
The excellent profitability rating of WSO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.73
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.
Compared to an average S&P500 Dividend Yield of 2.40, 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 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%
346.4
+0.8 (+0.23%)
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 Cap14.05B
Revenue(TTM)7.41B
Net Income(TTM)485.36M
Analysts65.71
Price Target417.56 (20.54%)
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 | 27.06 | ||
| Fwd PE | 25.18 | ||
| P/S | 1.89 | ||
| P/FCF | 27.15 | ||
| P/OCF | 25.6 | ||
| P/B | 4.99 | ||
| P/tB | 6.56 | ||
| EV/EBITDA | 17.44 |
EPS(TTM)12.8
EY3.7%
EPS(NY)13.76
Fwd EY3.97%
FCF(TTM)12.76
FCFY3.68%
OCF(TTM)13.53
OCFY3.91%
SpS182.85
BVpS69.42
TBVpS52.84
PEG (NY)N/A
PEG (5Y)1.73
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 | 8.01 |
F-Score6
WACC10.06%
ROIC/WACC1.54
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%.