WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
383.94 USD
-4.24 (-1.09%)
382.8 USD
-1.14 (-0.3%)
WSO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 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. WSO is valied quite expensively at the moment, while it does show a decent growth rate.
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.
- 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
- WSO has a better Return On Assets (10.66%) than 82.00% of its industry peers.
- WSO has a Return On Equity of 17.24%. This is in the better half of the industry: WSO outperforms 70.00% of its industry peers.
- With an excellent Return On Invested Capital value of 15.48%, WSO belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for WSO is significantly above the industry average of 9.64%.
- The last Return On Invested Capital (15.48%) 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 | 10.66% | ||
| 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
- WSO has a better Profit Margin (6.55%) than 68.00% of its industry peers.
- In the last couple of years the Profit Margin of WSO has grown nicely.
- WSO has a Operating Margin of 9.80%. This is in the better half of the industry: WSO outperforms 68.00% of its industry peers.
- WSO's Operating Margin has improved in the last couple of years.
- With a Gross Margin value of 27.92%, WSO perfoms like the industry average, outperforming 46.00% 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 | 9.8% | ||
| 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
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), WSO is creating value.
- The number of shares outstanding for WSO has been increased compared to 1 year ago.
- Compared to 5 years ago, WSO has more shares outstanding
- WSO has a better debt/assets ratio than last year.
2.2 Solvency
- WSO has an Altman-Z score of 8.61. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
- WSO has a better Altman-Z score (8.61) than 92.00% of its industry peers.
- WSO has a debt to FCF ratio of 0.02. This is a very positive value and a sign of high solvency as it would only need 0.02 years to pay back of all of its debts.
- With an excellent Debt to FCF ratio value of 0.02, WSO belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
- WSO has a Debt/Equity ratio of 0.00. This is a healthy value indicating a solid balance between debt and equity.
- WSO's Debt to Equity ratio of 0.00 is amongst the best of the industry. WSO outperforms 84.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 8.61 |
ROIC/WACC1.58
WACC9.82%
2.3 Liquidity
- A Current Ratio of 3.84 indicates that WSO has no problem at all paying its short term obligations.
- With an excellent Current ratio value of 3.84, WSO belongs to the best of the industry, outperforming 86.00% of the companies in the same industry.
- 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 70.00% 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.
- Looking at the last year, WSO shows a decrease in Revenue. The Revenue has decreased by -0.71% in the last year.
- The Revenue has been growing by 9.81% on average over the past years. This is quite good.
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-6.04%
EPS Next 2Y0.01%
EPS Next 3Y2.86%
EPS Next 5Y9.95%
Revenue Next Year-3.46%
Revenue Next 2Y-0.03%
Revenue Next 3Y1.65%
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
- WSO is valuated quite expensively with a Price/Earnings ratio of 30.00.
- WSO's Price/Earnings ratio is in line with the industry average.
- WSO's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.21.
- Based on the Price/Forward Earnings ratio of 28.97, the valuation of WSO can be described as expensive.
- WSO's Price/Forward Earnings ratio is in line with the industry average.
- The average S&P500 Price/Forward Earnings ratio is at 24.26. WSO is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30 | ||
| Fwd PE | 28.97 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of WSO indicates a slightly more expensive valuation: WSO is more expensive than 64.00% of the companies listed in the same industry.
- Based on the Price/Free Cash Flow ratio, WSO is valued a bit cheaper than the industry average as 66.00% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.09 | ||
| EV/EBITDA | 19.69 |
4.3 Compensation for Growth
- WSO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.91
EPS Next 2Y0.01%
EPS Next 3Y2.86%
5. Dividend
5.1 Amount
- WSO has a Yearly Dividend Yield of 3.19%.
- WSO's Dividend Yield is rather good when compared to the industry average which is at 1.48. WSO pays more dividend than 86.00% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, WSO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.19% |
5.2 History
- The dividend of WSO is nicely growing with an annual growth rate of 11.05%!
- WSO has paid a dividend for at least 10 years, which is 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
- WSO pays out 95.01% of its income as dividend. This is not a sustainable payout ratio.
- WSO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP95.01%
EPS Next 2Y0.01%
EPS Next 3Y2.86%
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%.