WATSCO INC (WSO) Stock Fundamental Analysis
USA - NYSE:WSO - US9426222009 - Common Stock
360.77 USD
-7.52 (-2.04%)
Taking everything into account, WSO scores 6 out of 10 in our fundamental rating. WSO was compared to 50 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. While showing a medium growth rate, WSO is valued expensive at the moment. These ratings would make WSO suitable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year WSO was profitable.
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 has a better Return On Assets (10.44%) than 88.00% of its industry peers.
WSO has a Return On Equity of 17.88%. This is in the better half of the industry: WSO outperforms 72.00% of its industry peers.
WSO has a Return On Invested Capital of 16.15%. This is amongst the best in the industry. WSO outperforms 90.00% 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 10.21%.
The last Return On Invested Capital (16.15%) 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 | 10.44% | ||
| ROE | 17.88% | ||
| ROIC | 16.15% |
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
Looking at the Profit Margin, with a value of 6.58%, WSO is in the better half of the industry, outperforming 72.00% 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 9.87% is fine compared to the rest of the industry. WSO outperforms 72.00% of its industry peers.
WSO's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 27.54%, WSO perfoms like the industry average, outperforming 46.00% of the companies in the same industry.
WSO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.87% | ||
| PM (TTM) | 6.58% | ||
| GM | 27.54% |
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.
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 7.61. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
WSO has a Altman-Z score of 7.61. This is amongst the best in the industry. WSO outperforms 88.00% of its industry peers.
WSO has a debt to FCF ratio of 0.04. This is a very positive value and a sign of high solvency as it would only need 0.04 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.04, WSO belongs to the top of the industry, outperforming 92.00% of the companies in the same industry.
A Debt/Equity ratio of 0.01 indicates that WSO is not too dependend on debt financing.
With an excellent Debt to Equity ratio value of 0.01, WSO belongs to the best of the industry, outperforming 88.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.04 | ||
| Altman-Z | 7.61 |
ROIC/WACC1.73
WACC9.32%
2.3 Liquidity
WSO has a Current Ratio of 3.08. This indicates that WSO is financially healthy and has no problem in meeting its short term obligations.
WSO's Current ratio of 3.08 is amongst the best of the industry. WSO outperforms 82.00% of its industry peers.
WSO has a Quick Ratio of 1.26. 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 of 1.26. This is comparable to the rest of the industry: WSO outperforms 52.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.08 | ||
| Quick Ratio | 1.26 |
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 been growing slightly by 4.59% in the past year.
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)4.59%
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.
Based on estimates for the next years, WSO will show a quite strong growth in Revenue. The Revenue will grow by 8.19% on average per year.
EPS Next Y-0.81%
EPS Next 2Y3.8%
EPS Next 3Y6.29%
EPS Next 5Y11.57%
Revenue Next Year-1.17%
Revenue Next 2Y2.35%
Revenue Next 3Y3.49%
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
With a Price/Earnings ratio of 28.19, WSO can be considered very expensive at the moment.
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 (26.76), we can say WSO is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 25.27, the valuation of WSO can be described as expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of WSO is on the same level as its industry peers.
WSO's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.63.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.19 | ||
| Fwd PE | 25.27 |
4.2 Price Multiples
68.00% of the companies in the same industry are cheaper than WSO, based on the Enterprise Value to EBITDA ratio.
WSO's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 37.1 | ||
| EV/EBITDA | 18.85 |
4.3 Compensation for Growth
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.8
EPS Next 2Y3.8%
EPS Next 3Y6.29%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.35%, WSO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.85, WSO pays a better dividend. On top of this WSO pays more dividend than 94.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.31, WSO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.35% |
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 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 90.85% 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.
DP90.85%
EPS Next 2Y3.8%
EPS Next 3Y6.29%
NYSE:WSO (10/30/2025, 2:52:44 PM)
360.77
-7.52 (-2.04%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners104.41%
Inst Owner Change-0.09%
Ins Owners0.38%
Ins Owner Change0%
Market Cap14.63B
Revenue(TTM)7.62B
Net Income(TTM)493.63M
Analysts67.62
Price Target441.78 (22.45%)
Short Float %7.69%
Short Ratio5.6
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.35% |
Yearly Dividend9.55
Dividend Growth(5Y)11.05%
DP90.85%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-11%
Min EPS beat(2)-15.33%
Max EPS beat(2)-6.66%
EPS beat(4)1
Avg EPS beat(4)-5.97%
Min EPS beat(4)-15.33%
Max EPS beat(4)9.8%
EPS beat(8)2
Avg EPS beat(8)-6.2%
EPS beat(12)4
Avg EPS beat(12)1.23%
EPS beat(16)7
Avg EPS beat(16)5.84%
Revenue beat(2)0
Avg Revenue beat(2)-8.48%
Min Revenue beat(2)-8.58%
Max Revenue beat(2)-8.37%
Revenue beat(4)1
Avg Revenue beat(4)-4.32%
Min Revenue beat(4)-8.58%
Max Revenue beat(4)4.34%
Revenue beat(8)2
Avg Revenue beat(8)-3%
Revenue beat(12)2
Avg Revenue beat(12)-3.22%
Revenue beat(16)4
Avg Revenue beat(16)-1.53%
PT rev (1m)-1.38%
PT rev (3m)-3.4%
EPS NQ rev (1m)-7.98%
EPS NQ rev (3m)-13.24%
EPS NY rev (1m)-4.4%
EPS NY rev (3m)-9.41%
Revenue NQ rev (1m)-2.96%
Revenue NQ rev (3m)-6.92%
Revenue NY rev (1m)-1.89%
Revenue NY rev (3m)-5.95%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.19 | ||
| Fwd PE | 25.27 | ||
| P/S | 1.95 | ||
| P/FCF | 37.1 | ||
| P/OCF | 34.3 | ||
| P/B | 5.3 | ||
| P/tB | 7.02 | ||
| EV/EBITDA | 18.85 |
EPS(TTM)12.8
EY3.55%
EPS(NY)14.28
Fwd EY3.96%
FCF(TTM)9.73
FCFY2.7%
OCF(TTM)10.52
OCFY2.92%
SpS185.14
BVpS68.08
TBVpS51.41
PEG (NY)N/A
PEG (5Y)1.8
Graham Number140.02
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.44% | ||
| ROE | 17.88% | ||
| ROCE | 20.25% | ||
| ROIC | 16.15% | ||
| ROICexc | 17.56% | ||
| ROICexgc | 21.97% | ||
| OM | 9.87% | ||
| PM (TTM) | 6.58% | ||
| GM | 27.54% | ||
| FCFM | 5.25% |
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-Score4
Asset Turnover1.59
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.04 | ||
| Debt/EBITDA | 0.02 | ||
| Cap/Depr | 75.57% | ||
| Cap/Sales | 0.43% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 54.44% | ||
| Profit Quality | 79.89% | ||
| Current Ratio | 3.08 | ||
| Quick Ratio | 1.26 | ||
| Altman-Z | 7.61 |
F-Score4
WACC9.32%
ROIC/WACC1.73
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-0.81%
EPS Next 2Y3.8%
EPS Next 3Y6.29%
EPS Next 5Y11.57%
Revenue 1Y (TTM)4.59%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-4.31%
Revenue Next Year-1.17%
Revenue Next 2Y2.35%
Revenue Next 3Y3.49%
Revenue Next 5Y8.19%
EBIT growth 1Y1.38%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year9.21%
EBIT Next 3Y10.63%
EBIT Next 5Y10.74%
FCF growth 1Y4.56%
FCF growth 3Y31.86%
FCF growth 5Y18.5%
OCF growth 1Y4.11%
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 6 / 10 to WSO.
What is the valuation status for WSO stock?
ChartMill assigns a valuation rating of 2 / 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 -0.81% 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 90.85%.