WATSCO INC (WSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:WSO - US9426222009 - Common Stock
385.14 USD
-0.7 (-0.18%)
385.14 USD
0 (0%)
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 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.
- In the past year WSO had a positive cash flow from operations.
- 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 Return On Assets of 10.66%. This is amongst the best in the industry. WSO outperforms 82.00% of its industry peers.
- Looking at the Return On Equity, with a value of 17.24%, WSO is in the better half of the industry, outperforming 70.00% of the companies in the same industry.
- WSO's Return On Invested Capital of 15.48% is amongst the best of the industry. WSO outperforms 90.00% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for WSO is significantly above the industry average of 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's Operating Margin of 9.80% is fine compared to the rest of the industry. WSO outperforms 68.00% of its industry peers.
- WSO's Operating Margin has improved in the last couple of years.
- Looking at the Gross Margin, with a value of 27.92%, WSO is in line with its industry, 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
- The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so 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.
- The debt/assets ratio for WSO has been reduced compared to a year ago.
2.2 Solvency
- WSO has an Altman-Z score of 8.57. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
- WSO's Altman-Z score of 8.57 is amongst the best of the industry. WSO outperforms 92.00% 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.
- 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.
- With an excellent Debt to Equity ratio value of 0.00, WSO belongs to the best 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 | 8.57 |
ROIC/WACC1.58
WACC9.78%
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.
- WSO has a Current ratio of 3.84. This is amongst the best in the industry. WSO outperforms 86.00% of its industry peers.
- A Quick Ratio of 1.86 indicates that WSO should not have too much problems paying its short term obligations.
- The Quick ratio of WSO (1.86) is better 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.
- Measured over the past years, WSO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.67% on average per year.
- Looking at the last year, WSO shows a decrease in Revenue. The Revenue has decreased by -0.71% in the last 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)-0.71%
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 9.95% on average per year.
- 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
- The Price/Earnings ratio is 30.09, which means the current valuation is very expensive for WSO.
- 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 28.60.
- With a Price/Forward Earnings ratio of 29.31, WSO can be considered very expensive at the moment.
- The rest of the industry has a similar Price/Forward Earnings ratio as WSO.
- When comparing the Price/Forward Earnings ratio of WSO to the average of the S&P500 Index (25.83), we can say WSO is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.09 | ||
| Fwd PE | 29.31 |
4.2 Price Multiples
- 64.00% of the companies in the same industry are cheaper than WSO, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, WSO is valued a bit cheaper than 66.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.19 | ||
| EV/EBITDA | 19.53 |
4.3 Compensation for Growth
- The excellent profitability rating of WSO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.92
EPS Next 2Y-0.41%
EPS Next 3Y2.4%
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 1.31. WSO pays more dividend than 88.00% of the companies in the same industry.
- WSO's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| 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 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
- 95.01% 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.
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%.