WATSCO INC (WSO) Stock Fundamental Analysis
USA • New York Stock Exchange • NYSE:WSO • US9426222009
387.93 USD
+1.48 (+0.38%)
Last: Feb 2, 2026, 01:01 PM
Overall WSO gets a fundamental rating of 6 out of 10. We evaluated WSO against 50 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 quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
- In the past year WSO was profitable.
- WSO had a positive operating cash flow in the past year.
- In the past 5 years WSO has always been profitable.
- WSO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- With an excellent Return On Assets value of 10.66%, WSO belongs to the best of the industry, outperforming 84.00% of the companies in the same industry.
- WSO has a Return On Equity of 17.24%. This is in the better half of the industry: WSO outperforms 72.00% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 15.48%, WSO belongs to the top of the industry, outperforming 92.00% of the companies in the same industry.
- WSO had an Average Return On Invested Capital over the past 3 years of 20.81%. This is significantly above the industry average of 9.64%.
- The 3 year average ROIC (20.81%) for WSO is well above the current ROIC(15.48%). The reason for the recent decline needs to be investigated.
| 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
- Looking at the Profit Margin, with a value of 6.55%, WSO is in the better half of the industry, outperforming 70.00% of the companies in the same industry.
- WSO's Profit Margin has improved in the last couple of years.
- WSO has a better Operating Margin (9.80%) than 70.00% of its industry peers.
- In the last couple of years the Operating Margin of WSO has grown nicely.
- WSO's Gross Margin of 27.92% is in line compared to the rest of the industry. WSO outperforms 46.00% of its industry peers.
- 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 5Y6.73%
GM growth 3Y0.36%
GM growth 5Y2.05%
2. Health
2.1 Basic Checks
- WSO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
- WSO has more shares outstanding than it did 1 year ago.
- WSO has more shares outstanding than it did 5 years ago.
- Compared to 1 year ago, WSO has an improved debt to assets ratio.
2.2 Solvency
- WSO has an Altman-Z score of 8.59. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
- WSO has a Altman-Z score of 8.59. This is amongst the best in the industry. WSO outperforms 90.00% of its industry peers.
- The Debt to FCF ratio of WSO is 0.02, which is an excellent value as it means it would take WSO, only 0.02 years of fcf income to pay off all of its debts.
- WSO has a Debt to FCF ratio of 0.02. This is amongst the best in the industry. WSO outperforms 92.00% of its industry peers.
- A Debt/Equity ratio of 0.00 indicates that WSO is not too dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.00, WSO belongs to the top of the industry, outperforming 84.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 8.59 |
ROIC/WACC1.56
WACC9.92%
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.
- The Current ratio of WSO (3.84) is better than 88.00% of its industry peers.
- A Quick Ratio of 1.86 indicates that WSO should not have too much problems paying its short term obligations.
- WSO has a better Quick ratio (1.86) than 72.00% 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.
- The Earnings Per Share has been growing by 15.67% on average over the past years. This is quite good.
- 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
- The Earnings Per Share is expected to grow by 9.95% on average over the next years. This is quite good.
- Based on estimates for the next years, WSO will show a small growth in Revenue. The Revenue will grow by 3.59% on average per year.
EPS Next Y-6.01%
EPS Next 2Y-0.41%
EPS Next 3Y2.4%
EPS Next 5Y9.95%
Revenue Next Year-3.44%
Revenue Next 2Y-0.04%
Revenue Next 3Y1.62%
Revenue Next 5Y3.59%
3.3 Evolution
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 30.31 indicates a quite expensive valuation of WSO.
- The rest of the industry has a similar Price/Earnings ratio as WSO.
- Compared to an average S&P500 Price/Earnings ratio of 28.32, WSO is valued at the same level.
- A Price/Forward Earnings ratio of 29.52 indicates a quite expensive valuation of WSO.
- WSO's Price/Forward Earnings is on the same level as the industry average.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, WSO is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.31 | ||
| Fwd PE | 29.52 |
4.2 Price Multiples
- WSO's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. WSO is more expensive than 62.00% of the companies in the same industry.
- WSO's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. WSO is cheaper than 68.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.41 | ||
| EV/EBITDA | 19.59 |
4.3 Compensation for Growth
- The excellent profitability rating of WSO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.93
EPS Next 2Y-0.41%
EPS Next 3Y2.4%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.19%, 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 0.88. WSO pays more dividend than 92.00% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.83, WSO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.19% |
5.2 History
- On average, the dividend of WSO grows each year by 11.05%, which is quite nice.
- 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.
- The dividend of WSO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP95.01%
EPS Next 2Y-0.41%
EPS Next 3Y2.4%
WATSCO INC / WSO FAQ
What is the fundamental rating for WSO stock?
ChartMill assigns a fundamental rating of 6 / 10 to WSO.
Can you provide the valuation status for WATSCO INC?
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 financial health of WATSCO INC (WSO) stock?
The financial health rating of WATSCO INC (WSO) is 8 / 10.
Is the dividend of WATSCO INC sustainable?
The dividend rating of WATSCO INC (WSO) is 6 / 10 and the dividend payout ratio is 95.01%.