WATSCO INC (WSO) Stock Fundamental Analysis
NYSE:WSO - New York Stock Exchange, Inc. - US9426222009 - Common Stock - Currency: USD
WSO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 48 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.
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.
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
Looking at the Return On Assets, with a value of 10.73%, WSO belongs to the top of the industry, outperforming 87.23% of the companies in the same industry.
WSO has a Return On Equity of 17.99%. This is in the better half of the industry: WSO outperforms 63.83% of its industry peers.
With an excellent Return On Invested Capital value of 16.67%, WSO belongs to the best of the industry, outperforming 91.49% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for WSO is significantly above the industry average of 9.69%.
The last Return On Invested Capital (16.67%) for WSO is well below the 3 year average (22.74%), which needs to be investigated, but indicates that WSO had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.73% | ||
| ROE | 17.99% | ||
| ROIC | 16.67% |
ROA(3y)13.84%
ROA(5y)12.05%
ROE(3y)24.81%
ROE(5y)21.34%
ROIC(3y)22.74%
ROIC(5y)19.68%
1.3 Margins
The Profit Margin of WSO (6.49%) is better than 68.09% of its industry peers.
WSO's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 9.69%, WSO is in the better half of the industry, outperforming 61.70% of the companies in the same industry.
In the last couple of years the Operating Margin of WSO has grown nicely.
Looking at the Gross Margin, with a value of 26.66%, WSO is doing worse than 63.83% 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 | 9.69% | ||
| PM (TTM) | 6.49% | ||
| GM | 26.66% |
OM growth 3Y11.03%
OM growth 5Y5.75%
PM growth 3Y12.04%
PM growth 5Y6.92%
GM growth 3Y4.18%
GM growth 5Y2.11%
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
The debt/assets ratio for WSO has been reduced compared to a year ago.
2.2 Solvency
WSO has an Altman-Z score of 10.71. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of WSO (10.71) is better than 93.62% 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's Debt to FCF ratio of 0.02 is amongst the best of the industry. WSO outperforms 93.62% of its industry peers.
WSO has a Debt/Equity ratio of 0.01. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.01, WSO belongs to the top of the industry, outperforming 89.36% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 10.71 |
ROIC/WACC1.42
WACC11.71%
2.3 Liquidity
A Current Ratio of 3.36 indicates that WSO has no problem at all paying its short term obligations.
The Current ratio of WSO (3.36) is better than 85.11% of its industry peers.
A Quick Ratio of 1.65 indicates that WSO should not have too much problems paying its short term obligations.
WSO has a Quick ratio of 1.65. This is in the better half of the industry: WSO outperforms 72.34% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.36 | ||
| Quick Ratio | 1.65 |
3. Growth
3.1 Past
The earnings per share for WSO have decreased strongly by -14.59% in the last year.
The Earnings Per Share has been growing by 16.30% on average over the past years. This is quite good.
WSO shows a small growth in Revenue. In the last year, the Revenue has grown by 2.83%.
WSO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.88% yearly.
EPS 1Y (TTM)-14.59%
EPS 3Y25.69%
EPS 5Y16.3%
EPS Q2Q%-2.99%
Revenue 1Y (TTM)2.83%
Revenue growth 3Y12.95%
Revenue growth 5Y9.88%
Sales Q2Q%1.56%
3.2 Future
The Earnings Per Share is expected to grow by 7.36% on average over the next years.
WSO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.59% yearly.
EPS Next Y-2.13%
EPS Next 2Y4.8%
EPS Next 3Y6.96%
EPS Next 5Y7.36%
Revenue Next Year2.78%
Revenue Next 2Y4.68%
Revenue Next 3Y5.27%
Revenue Next 5Y7.59%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
WSO is valuated quite expensively with a Price/Earnings ratio of 38.50.
WSO's Price/Earnings ratio is a bit more expensive when compared to the industry. WSO is more expensive than 74.47% of the companies in the same industry.
When comparing the Price/Earnings ratio of WSO to the average of the S&P500 Index (28.64), we can say WSO is valued slightly more expensively.
The Price/Forward Earnings ratio is 33.20, which means the current valuation is very expensive for WSO.
Based on the Price/Forward Earnings ratio, WSO is valued a bit more expensive than 70.21% of the companies in the same industry.
WSO is valuated rather expensively when we compare the Price/Forward Earnings ratio to 24.51, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 38.5 | ||
| Fwd PE | 33.2 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of WSO indicates a rather expensive valuation: WSO more expensive than 82.98% of the companies listed in the same industry.
WSO's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 34.63 | ||
| EV/EBITDA | 29.07 |
4.3 Compensation for Growth
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.36
EPS Next 2Y4.8%
EPS Next 3Y6.96%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.20%, WSO has a reasonable but not impressive dividend return.
WSO's Dividend Yield is rather good when compared to the industry average which is at 1.84. WSO pays more dividend than 89.36% of the companies in the same industry.
WSO's Dividend Yield is comparable with the S&P500 average which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
5.2 History
The dividend of WSO is nicely growing with an annual growth rate of 11.93%!
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)11.93%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
WSO pays out 84.75% of its income as dividend. This is not a sustainable payout ratio.
WSO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP84.75%
EPS Next 2Y4.8%
EPS Next 3Y6.96%
WATSCO INC
NYSE:WSO (1/23/2025, 8:33:22 PM)
Premarket: 500.16 +2 (+0.4%)498.16
-7.48 (-1.48%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners107.27%
Inst Owner Change-0.55%
Ins Owners0.63%
Ins Owner Change0%
Market Cap22.88B
Analysts68.42
Price Target499.3 (0.23%)
Short Float %6.82%
Short Ratio11.44
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
Yearly Dividend8.71
Dividend Growth(5Y)11.93%
DP84.75%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-8.4%
Min EPS beat(2)-11.69%
Max EPS beat(2)-5.12%
EPS beat(4)0
Avg EPS beat(4)-9.46%
Min EPS beat(4)-15.46%
Max EPS beat(4)-5.12%
EPS beat(8)3
Avg EPS beat(8)4.46%
EPS beat(12)5
Avg EPS beat(12)8.62%
EPS beat(16)9
Avg EPS beat(16)11.98%
Revenue beat(2)0
Avg Revenue beat(2)-3.83%
Min Revenue beat(2)-4.68%
Max Revenue beat(2)-2.98%
Revenue beat(4)0
Avg Revenue beat(4)-3.55%
Min Revenue beat(4)-4.68%
Max Revenue beat(4)-2.8%
Revenue beat(8)1
Avg Revenue beat(8)-3.09%
Revenue beat(12)3
Avg Revenue beat(12)-0.71%
Revenue beat(16)6
Avg Revenue beat(16)4.64%
PT rev (1m)0%
PT rev (3m)3.59%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-5.84%
EPS NY rev (1m)0%
EPS NY rev (3m)-4.95%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.64%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 38.5 | ||
| Fwd PE | 33.2 | ||
| P/S | 3.06 | ||
| P/FCF | 34.63 | ||
| P/OCF | 33.03 | ||
| P/B | 8.49 | ||
| P/tB | 11.29 | ||
| EV/EBITDA | 29.07 |
EPS(TTM)12.94
EY2.6%
EPS(NY)15
Fwd EY3.01%
FCF(TTM)14.39
FCFY2.89%
OCF(TTM)15.08
OCFY3.03%
SpS162.59
BVpS58.71
TBVpS44.11
PEG (NY)N/A
PEG (5Y)2.36
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.73% | ||
| ROE | 17.99% | ||
| ROCE | 20.19% | ||
| ROIC | 16.67% | ||
| ROICexc | 19.69% | ||
| ROICexgc | 25.28% | ||
| OM | 9.69% | ||
| PM (TTM) | 6.49% | ||
| GM | 26.66% | ||
| FCFM | 8.85% |
ROA(3y)13.84%
ROA(5y)12.05%
ROE(3y)24.81%
ROE(5y)21.34%
ROIC(3y)22.74%
ROIC(5y)19.68%
ROICexc(3y)24.16%
ROICexc(5y)20.89%
ROICexgc(3y)32.45%
ROICexgc(5y)28.64%
ROCE(3y)27.54%
ROCE(5y)23.83%
ROICexcg growth 3Y5.49%
ROICexcg growth 5Y3.25%
ROICexc growth 3Y9.16%
ROICexc growth 5Y5.36%
OM growth 3Y11.03%
OM growth 5Y5.75%
PM growth 3Y12.04%
PM growth 5Y6.92%
GM growth 3Y4.18%
GM growth 5Y2.11%
F-Score5
Asset Turnover1.65
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.02 | ||
| Debt/EBITDA | 0.02 | ||
| Cap/Depr | 80.06% | ||
| Cap/Sales | 0.43% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 90.72% | ||
| Profit Quality | 136.26% | ||
| Current Ratio | 3.36 | ||
| Quick Ratio | 1.65 | ||
| Altman-Z | 10.71 |
F-Score5
WACC11.71%
ROIC/WACC1.42
Cap/Depr(3y)101.39%
Cap/Depr(5y)88.03%
Cap/Sales(3y)0.46%
Cap/Sales(5y)0.42%
Profit Quality(3y)95.96%
Profit Quality(5y)127.83%
High Growth Momentum
Growth
EPS 1Y (TTM)-14.59%
EPS 3Y25.69%
EPS 5Y16.3%
EPS Q2Q%-2.99%
EPS Next Y-2.13%
EPS Next 2Y4.8%
EPS Next 3Y6.96%
EPS Next 5Y7.36%
Revenue 1Y (TTM)2.83%
Revenue growth 3Y12.95%
Revenue growth 5Y9.88%
Sales Q2Q%1.56%
Revenue Next Year2.78%
Revenue Next 2Y4.68%
Revenue Next 3Y5.27%
Revenue Next 5Y7.59%
EBIT growth 1Y-9.37%
EBIT growth 3Y25.41%
EBIT growth 5Y16.2%
EBIT Next Year-2.96%
EBIT Next 3Y6.99%
EBIT Next 5Y6.98%
FCF growth 1Y86.9%
FCF growth 3Y0.54%
FCF growth 5Y27.97%
OCF growth 1Y78.21%
OCF growth 3Y1.69%
OCF growth 5Y26.92%