WATSCO INC (WSO) Stock Fundamental Analysis
NYSE:WSO - New York Stock Exchange, Inc. - US9426222009 - Common Stock - Currency: USD
Overall WSO gets a fundamental rating of 6 out of 10. We evaluated WSO against 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. With these ratings, WSO could be worth investigating further 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.
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 has a Return On Assets of 11.02%. This is amongst the best in the industry. WSO outperforms 89.80% of its industry peers.
The Return On Equity of WSO (18.42%) is better than 71.43% of its industry peers.
WSO has a Return On Invested Capital of 16.66%. This is amongst the best in the industry. WSO outperforms 87.76% 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 9.84%.
The 3 year average ROIC (20.81%) for WSO is well above the current ROIC(16.66%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.02% | ||
| ROE | 18.42% | ||
| ROIC | 16.66% |
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
The Profit Margin of WSO (6.47%) is better than 73.47% of its industry peers.
WSO's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 9.72%, WSO is doing good in the industry, outperforming 71.43% of the companies in the same industry.
WSO's Operating Margin has improved in the last couple of years.
The Gross Margin of WSO (26.95%) 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 | 9.72% | ||
| PM (TTM) | 6.47% | ||
| GM | 26.95% |
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so WSO is creating value.
WSO has more shares outstanding than it did 1 year ago.
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 9.43. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 9.43, WSO belongs to the best of the industry, outperforming 93.88% of the companies in the same industry.
WSO has a debt to FCF ratio of 0.03. This is a very positive value and a sign of high solvency as it would only need 0.03 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 0.03, WSO belongs to the best of the industry, outperforming 89.80% of the companies in the same industry.
A Debt/Equity ratio of 0.01 indicates that WSO is not too dependend on debt financing.
WSO's Debt to Equity ratio of 0.01 is amongst the best of the industry. WSO outperforms 83.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.03 | ||
| Altman-Z | 9.43 |
ROIC/WACC1.66
WACC10.06%
2.3 Liquidity
WSO has a Current Ratio of 3.28. This indicates that WSO is financially healthy and has no problem in meeting its short term obligations.
WSO has a better Current ratio (3.28) than 77.55% of its industry peers.
WSO has a Quick Ratio of 1.36. 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 Quick ratio (1.36) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.28 | ||
| Quick Ratio | 1.36 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 0.08% over the past year.
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 small growth in Revenue. In the last year, the Revenue has grown by 3.92%.
The Revenue has been growing by 9.81% on average over the past years. This is quite good.
EPS 1Y (TTM)0.08%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%-11.06%
Revenue 1Y (TTM)3.92%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-2.17%
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 9.33% yearly.
WSO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.09% yearly.
EPS Next Y9.67%
EPS Next 2Y9.09%
EPS Next 3Y10.16%
EPS Next 5Y9.33%
Revenue Next Year5.26%
Revenue Next 2Y5.26%
Revenue Next 3Y5.46%
Revenue Next 5Y8.09%
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 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 35.15, which means the current valuation is very expensive for WSO.
Based on the Price/Earnings ratio, WSO is valued a bit more expensive than 61.22% of the companies in the same industry.
When comparing the Price/Earnings ratio of WSO to the average of the S&P500 Index (27.45), we can say WSO is valued slightly more expensively.
With a Price/Forward Earnings ratio of 29.00, WSO can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Forward Earnings ratio of WSO indicates a slightly more expensive valuation: WSO is more expensive than 65.31% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.90, WSO is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.15 | ||
| Fwd PE | 29 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WSO is valued a bit more expensive than the industry average as 73.47% of the companies are valued more cheaply.
The rest of the industry has a similar Price/Free Cash Flow ratio as WSO.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 40.28 | ||
| EV/EBITDA | 23.39 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates WSO does not grow enough to justify the current Price/Earnings ratio.
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)3.64
PEG (5Y)2.24
EPS Next 2Y9.09%
EPS Next 3Y10.16%
5. Dividend
5.1 Amount
WSO has a Yearly Dividend Yield of 2.62%.
Compared to an average industry Dividend Yield of 2.99, WSO pays a better dividend. On top of this WSO pays more dividend than 85.71% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, WSO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.62% |
5.2 History
On average, the dividend of WSO grows each year by 11.05%, which is quite nice.
WSO has been paying a dividend for at least 10 years, so it has a reliable track record.
WSO has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)11.05%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
88.76% of the earnings are spent on dividend by WSO. This is not a sustainable payout ratio.
The dividend of WSO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP88.76%
EPS Next 2Y9.09%
EPS Next 3Y10.16%
457.32
+0.77 (+0.17%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners106.27%
Inst Owner Change1.91%
Ins Owners0.39%
Ins Owner Change0%
Market Cap18.53B
Analysts67.62
Price Target498.78 (9.07%)
Short Float %6.91%
Short Ratio7.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.62% |
Yearly Dividend9.55
Dividend Growth(5Y)11.05%
DP88.76%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-2.77%
Min EPS beat(2)-15.33%
Max EPS beat(2)9.8%
EPS beat(4)1
Avg EPS beat(4)-5.58%
Min EPS beat(4)-15.33%
Max EPS beat(4)9.8%
EPS beat(8)2
Avg EPS beat(8)-6.76%
EPS beat(12)4
Avg EPS beat(12)1.51%
EPS beat(16)8
Avg EPS beat(16)7.52%
Revenue beat(2)1
Avg Revenue beat(2)-2.02%
Min Revenue beat(2)-8.37%
Max Revenue beat(2)4.34%
Revenue beat(4)1
Avg Revenue beat(4)-2.92%
Min Revenue beat(4)-8.37%
Max Revenue beat(4)4.34%
Revenue beat(8)2
Avg Revenue beat(8)-3.1%
Revenue beat(12)2
Avg Revenue beat(12)-2.76%
Revenue beat(16)5
Avg Revenue beat(16)3.76%
PT rev (1m)0.1%
PT rev (3m)-3.34%
EPS NQ rev (1m)0.32%
EPS NQ rev (3m)-1.21%
EPS NY rev (1m)0.1%
EPS NY rev (3m)-2.3%
Revenue NQ rev (1m)0.04%
Revenue NQ rev (3m)-1.78%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)-1.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.15 | ||
| Fwd PE | 29 | ||
| P/S | 2.44 | ||
| P/FCF | 40.28 | ||
| P/OCF | 37.67 | ||
| P/B | 6.95 | ||
| P/tB | 9.25 | ||
| EV/EBITDA | 23.39 |
EPS(TTM)13.01
EY2.84%
EPS(NY)15.77
Fwd EY3.45%
FCF(TTM)11.35
FCFY2.48%
OCF(TTM)12.14
OCFY2.65%
SpS187.22
BVpS65.79
TBVpS49.44
PEG (NY)3.64
PEG (5Y)2.24
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.02% | ||
| ROE | 18.42% | ||
| ROCE | 20.89% | ||
| ROIC | 16.66% | ||
| ROICexc | 18.98% | ||
| ROICexgc | 24.14% | ||
| OM | 9.72% | ||
| PM (TTM) | 6.47% | ||
| GM | 26.95% | ||
| FCFM | 6.06% |
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%
ROICexcg growth 3Y-0.91%
ROICexcg 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-Score7
Asset Turnover1.7
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.03 | ||
| Debt/EBITDA | 0.02 | ||
| Cap/Depr | 76.19% | ||
| Cap/Sales | 0.42% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 63.13% | ||
| Profit Quality | 93.69% | ||
| Current Ratio | 3.28 | ||
| Quick Ratio | 1.36 | ||
| Altman-Z | 9.43 |
F-Score7
WACC10.06%
ROIC/WACC1.66
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)0.08%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%-11.06%
EPS Next Y9.67%
EPS Next 2Y9.09%
EPS Next 3Y10.16%
EPS Next 5Y9.33%
Revenue 1Y (TTM)3.92%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-2.17%
Revenue Next Year5.26%
Revenue Next 2Y5.26%
Revenue Next 3Y5.46%
Revenue Next 5Y8.09%
EBIT growth 1Y1.18%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year14.6%
EBIT Next 3Y10.81%
EBIT Next 5Y9.41%
FCF growth 1Y-22.22%
FCF growth 3Y31.86%
FCF growth 5Y18.5%
OCF growth 1Y-21.47%
OCF growth 3Y30.29%
OCF growth 5Y18.15%