WATSCO INC (WSO) Stock Fundamental Analysis
USA - NYSE:WSO - US9426222009 - Common Stock
384.25 USD
-3.28 (-0.85%)
384.25 USD
0 (0%)
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
WSO had positive earnings in the past year.
WSO had a positive operating cash flow in the past year.
Each year in the past 5 years WSO has 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 10.44%, WSO belongs to the top of the industry, outperforming 88.00% of the companies in the same industry.
The Return On Equity of WSO (17.88%) is better than 70.00% of its industry peers.
The Return On Invested Capital of WSO (16.15%) is better than 88.00% of its industry peers.
The Average Return On Invested Capital over the past 3 years for WSO is significantly above the industry average of 10.24%.
The 3 year average ROIC (20.81%) for WSO is well above the current ROIC(16.15%). The reason for the recent decline needs to be investigated.
| 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
The Profit Margin of WSO (6.58%) is better than 70.00% of its industry peers.
WSO's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 9.87%, WSO is doing good in the industry, outperforming 72.00% of the companies in the same industry.
WSO's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 27.54%, WSO is in line with its industry, outperforming 44.00% 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 | 9.87% | ||
| 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.
Compared to 1 year ago, WSO has more shares outstanding
The number of shares outstanding for WSO has been increased compared to 5 years ago.
Compared to 1 year ago, WSO has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 7.85 indicates that WSO is not in any danger for bankruptcy at the moment.
The Altman-Z score of WSO (7.85) is better than 92.00% of its industry peers.
The Debt to FCF ratio of WSO is 0.04, which is an excellent value as it means it would take WSO, only 0.04 years of fcf income to pay off 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.
WSO has a better Debt to Equity ratio (0.01) than 86.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.04 | ||
| Altman-Z | 7.85 |
ROIC/WACC1.69
WACC9.56%
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 has a better Current ratio (3.08) than 80.00% 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 50.00% 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 -0.20%.
The Earnings Per Share has been growing by 15.67% on average over the past years. This is quite good.
The Revenue has been growing slightly by 0.98% in the past year.
The Revenue has been growing by 9.81% on average over the past years. This is quite good.
EPS 1Y (TTM)-0.2%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%0.76%
Revenue 1Y (TTM)0.98%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-3.59%
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 11.39% on average per year.
WSO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.81% yearly.
EPS Next Y4.56%
EPS Next 2Y6.11%
EPS Next 3Y8.53%
EPS Next 5Y11.39%
Revenue Next Year0.74%
Revenue Next 2Y3.32%
Revenue Next 3Y4.31%
Revenue Next 5Y6.81%
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 decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 29.47, which means the current valuation is very expensive for WSO.
The rest of the industry has a similar Price/Earnings ratio as WSO.
WSO's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.20.
With a Price/Forward Earnings ratio of 25.76, 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 64.00% of the companies listed in the same industry.
WSO is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.70, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.47 | ||
| Fwd PE | 25.76 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WSO is valued a bit more expensive than the industry average as 68.00% of the companies are valued more cheaply.
WSO's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.51 | ||
| EV/EBITDA | 19.85 |
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)6.46
PEG (5Y)1.88
EPS Next 2Y6.11%
EPS Next 3Y8.53%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.97%, 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 2.75. WSO pays more dividend than 88.00% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, WSO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.97% |
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
90.85% of the earnings are spent on dividend by WSO. 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 2Y6.11%
EPS Next 3Y8.53%
384.25
-3.28 (-0.85%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryTrading Companies & Distributors
Earnings (Last)
Earnings (Next)
Inst Owners106.25%
Inst Owner Change-2.66%
Ins Owners0.38%
Ins Owner Change0%
Market Cap15.58B
Analysts67.62
Price Target478.76 (24.6%)
Short Float %7.11%
Short Ratio6.79
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.97% |
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)-1.05%
PT rev (3m)-4.01%
EPS NQ rev (1m)0.52%
EPS NQ rev (3m)-5.97%
EPS NY rev (1m)-4.5%
EPS NY rev (3m)-4.56%
Revenue NQ rev (1m)-0.31%
Revenue NQ rev (3m)-4.16%
Revenue NY rev (1m)-3.99%
Revenue NY rev (3m)-4.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.47 | ||
| Fwd PE | 25.76 | ||
| P/S | 2.08 | ||
| P/FCF | 39.51 | ||
| P/OCF | 36.53 | ||
| P/B | 5.64 | ||
| P/tB | 7.47 | ||
| EV/EBITDA | 19.85 |
EPS(TTM)13.04
EY3.39%
EPS(NY)14.92
Fwd EY3.88%
FCF(TTM)9.73
FCFY2.53%
OCF(TTM)10.52
OCFY2.74%
SpS185.14
BVpS68.08
TBVpS51.41
PEG (NY)6.46
PEG (5Y)1.88
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%
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-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 | 7.85 |
F-Score4
WACC9.56%
ROIC/WACC1.69
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)-0.2%
EPS 3Y7.25%
EPS 5Y15.67%
EPS Q2Q%0.76%
EPS Next Y4.56%
EPS Next 2Y6.11%
EPS Next 3Y8.53%
EPS Next 5Y11.39%
Revenue 1Y (TTM)0.98%
Revenue growth 3Y6.65%
Revenue growth 5Y9.81%
Sales Q2Q%-3.59%
Revenue Next Year0.74%
Revenue Next 2Y3.32%
Revenue Next 3Y4.31%
Revenue Next 5Y6.81%
EBIT growth 1Y1.38%
EBIT growth 3Y7.24%
EBIT growth 5Y16.07%
EBIT Next Year10.75%
EBIT Next 3Y10%
EBIT Next 5Y11.17%
FCF growth 1Y4.56%
FCF growth 3Y31.86%
FCF growth 5Y18.5%
OCF growth 1Y4.11%
OCF growth 3Y30.29%
OCF growth 5Y18.15%