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 gets an excellent profitability rating and is at the same time showing great financial health properties. WSO is quite expensive at the moment. It does show a decent growth rate. These ratings could make WSO a good candidate 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.
In the past 5 years WSO has always been profitable.
In the past 5 years WSO always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 11.10%, WSO belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
Looking at the Return On Equity, with a value of 18.72%, WSO is in the better half of the industry, outperforming 68.75% of the companies in the same industry.
With an excellent Return On Invested Capital value of 17.14%, WSO belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for WSO is significantly above the industry average of 9.86%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.1% | ||
| ROE | 18.72% | ||
| ROIC | 17.14% |
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
With a decent Profit Margin value of 6.53%, WSO is doing good in the industry, outperforming 72.92% of the companies in the same industry.
WSO's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 9.86%, WSO is doing good in the industry, outperforming 62.50% of the companies in the same industry.
In the last couple of years the Operating Margin of WSO has grown nicely.
WSO has a Gross Margin of 26.84%. This is in the lower half of the industry: WSO underperforms 62.50% of its industry peers.
WSO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.86% | ||
| PM (TTM) | 6.53% | ||
| GM | 26.84% |
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
WSO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for WSO has been reduced compared to 1 year ago.
WSO has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, WSO has a worse debt to assets ratio.
2.2 Solvency
There is no outstanding debt for WSO. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.15 | ||
| Altman-Z | N/A |
ROIC/WACC1.58
WACC10.83%
2.3 Liquidity
A Current Ratio of 3.13 indicates that WSO has no problem at all paying its short term obligations.
The Current ratio of WSO (3.13) is better than 79.17% of its industry peers.
A Quick Ratio of 1.72 indicates that WSO should not have too much problems paying its short term obligations.
WSO's Quick ratio of 1.72 is fine compared to the rest of the industry. WSO outperforms 79.17% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.13 | ||
| Quick Ratio | 1.72 |
3. Growth
3.1 Past
The earnings per share for WSO have decreased by -3.00% in the last year.
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.
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)-3%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%15.05%
Revenue 1Y (TTM)4.59%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%9.4%
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 10.12% on average per year.
The Revenue is expected to grow by 8.81% on average over the next years. This is quite good.
EPS Next Y13.78%
EPS Next 2Y12.12%
EPS Next 3Y12.37%
EPS Next 5Y10.12%
Revenue Next Year6.36%
Revenue Next 2Y6.43%
Revenue Next 3Y6.99%
Revenue Next 5Y8.81%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
WSO is valuated quite expensively with a Price/Earnings ratio of 37.64.
Based on the Price/Earnings ratio, WSO is valued a bit more expensive than the industry average as 70.83% of the companies are valued more cheaply.
The average S&P500 Price/Earnings ratio is at 29.63. WSO is valued slightly more expensive when compared to this.
Based on the Price/Forward Earnings ratio of 33.08, the valuation of WSO can be described as expensive.
Based on the Price/Forward Earnings ratio, WSO is valued a bit more expensive than 70.83% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.68. WSO is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.64 | ||
| Fwd PE | 33.08 |
4.2 Price Multiples
79.17% 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 a bit cheaper when compared to the industry. WSO is cheaper than 66.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.82 | ||
| EV/EBITDA | 27.75 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
WSO has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as WSO's earnings are expected to grow with 12.37% in the coming years.
PEG (NY)2.73
PEG (5Y)2.4
EPS Next 2Y12.12%
EPS Next 3Y12.37%
5. Dividend
5.1 Amount
WSO has a Yearly Dividend Yield of 2.10%.
WSO's Dividend Yield is rather good when compared to the industry average which is at 1.86. WSO pays more dividend than 89.58% of the companies in the same industry.
WSO's Dividend Yield is comparable with the S&P500 average which is at 2.27.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
5.2 History
On average, the dividend of WSO grows each year by 12.10%, 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)12.1%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
85.15% 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.
DP85.15%
EPS Next 2Y12.12%
EPS Next 3Y12.37%
498.68
-16.53 (-3.21%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners105.71%
Inst Owner Change-83.86%
Ins Owners0.39%
Ins Owner Change0%
Market Cap22.90B
Analysts68
Price Target494.2 (-0.9%)
Short Float %6.63%
Short Ratio11.03
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
Yearly Dividend10.01
Dividend Growth(5Y)12.1%
DP85.15%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.94%
Min EPS beat(2)-11.69%
Max EPS beat(2)9.8%
EPS beat(4)1
Avg EPS beat(4)-3.15%
Min EPS beat(4)-11.69%
Max EPS beat(4)9.8%
EPS beat(8)3
Avg EPS beat(8)-2.52%
EPS beat(12)5
Avg EPS beat(12)7.93%
EPS beat(16)9
Avg EPS beat(16)11.75%
Revenue beat(2)1
Avg Revenue beat(2)-0.17%
Min Revenue beat(2)-4.68%
Max Revenue beat(2)4.34%
Revenue beat(4)1
Avg Revenue beat(4)-1.53%
Min Revenue beat(4)-4.68%
Max Revenue beat(4)4.34%
Revenue beat(8)2
Avg Revenue beat(8)-2.2%
Revenue beat(12)3
Avg Revenue beat(12)-1.27%
Revenue beat(16)6
Avg Revenue beat(16)4.62%
PT rev (1m)-1.02%
PT rev (3m)-1.02%
EPS NQ rev (1m)-0.32%
EPS NQ rev (3m)-6.19%
EPS NY rev (1m)0.48%
EPS NY rev (3m)0.09%
Revenue NQ rev (1m)0.18%
Revenue NQ rev (3m)-1.36%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.64 | ||
| Fwd PE | 33.08 | ||
| P/S | 3.01 | ||
| P/FCF | 30.82 | ||
| P/OCF | 29.63 | ||
| P/B | 8.62 | ||
| P/tB | 12.6 | ||
| EV/EBITDA | 27.75 |
EPS(TTM)13.25
EY2.66%
EPS(NY)15.08
Fwd EY3.02%
FCF(TTM)16.18
FCFY3.25%
OCF(TTM)16.83
OCFY3.38%
SpS165.87
BVpS57.85
TBVpS39.56
PEG (NY)2.73
PEG (5Y)2.4
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.1% | ||
| ROE | 18.72% | ||
| ROCE | 21.49% | ||
| ROIC | 17.14% | ||
| ROICexc | 22.08% | ||
| ROICexgc | 31.97% | ||
| OM | 9.86% | ||
| PM (TTM) | 6.53% | ||
| GM | 26.84% | ||
| FCFM | 9.76% |
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)32%
ROICexgc(5y)30.1%
ROCE(3y)26.1%
ROCE(5y)24.73%
ROICexcg growth 3Y2.16%
ROICexcg growth 5Y10.07%
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 Turnover1.7
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.15 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 73.07% | ||
| Cap/Sales | 0.39% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 97.6% | ||
| Profit Quality | 149.44% | ||
| Current Ratio | 3.13 | ||
| Quick Ratio | 1.72 | ||
| Altman-Z | N/A |
F-Score4
WACC10.83%
ROIC/WACC1.58
Cap/Depr(3y)95.57%
Cap/Depr(5y)88.11%
Cap/Sales(3y)0.46%
Cap/Sales(5y)0.42%
Profit Quality(3y)117.32%
Profit Quality(5y)129.42%
High Growth Momentum
Growth
EPS 1Y (TTM)-3%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%15.05%
EPS Next Y13.78%
EPS Next 2Y12.12%
EPS Next 3Y12.37%
EPS Next 5Y10.12%
Revenue 1Y (TTM)4.59%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%9.4%
Revenue Next Year6.36%
Revenue Next 2Y6.43%
Revenue Next 3Y6.99%
Revenue Next 5Y8.81%
EBIT growth 1Y-2.26%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year17.18%
EBIT Next 3Y15.15%
EBIT Next 5Y10.86%
FCF growth 1Y41.18%
FCF growth 3Y31.87%
FCF growth 5Y18.51%
OCF growth 1Y37.57%
OCF growth 3Y30.29%
OCF growth 5Y18.15%