WATSCO INC (WSO) Fundamental Analysis & Valuation
NYSE:WSO • US9426222009
Current stock price
410.63 USD
-5.64 (-1.35%)
At close:
411.958 USD
+1.33 (+0.32%)
After Hours:
This WSO fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.
1. WSO Profitability Analysis
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
- With an excellent Return On Assets value of 10.47%, WSO belongs to the best of the industry, outperforming 87.23% of the companies in the same industry.
- With a decent Return On Equity value of 16.62%, WSO is doing good in the industry, outperforming 74.47% of the companies in the same industry.
- Looking at the Return On Invested Capital, with a value of 14.88%, WSO belongs to the top of the industry, outperforming 89.36% 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 9.04%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.47% | ||
| ROE | 16.62% | ||
| ROIC | 14.88% |
ROA(3y)11.68%
ROA(5y)12.63%
ROE(3y)19.29%
ROE(5y)21.98%
ROIC(3y)17.4%
ROIC(5y)19.52%
1.3 Margins
- Looking at the Profit Margin, with a value of 6.39%, WSO is in the better half of the industry, outperforming 70.21% of the companies in the same industry.
- WSO's Profit Margin has improved in the last couple of years.
- WSO's Operating Margin of 9.57% is fine compared to the rest of the industry. WSO outperforms 74.47% of its industry peers.
- WSO's Operating Margin has improved in the last couple of years.
- WSO has a Gross Margin (28.05%) which is comparable to the rest of the industry.
- In the last couple of years the Gross Margin of WSO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.57% | ||
| PM (TTM) | 6.39% | ||
| GM | 28.05% |
OM growth 3Y-4.89%
OM growth 5Y4.41%
PM growth 3Y-5.33%
PM growth 5Y5.63%
GM growth 3Y0.16%
GM growth 5Y3%
2. WSO Health Analysis
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.
- WSO has more shares outstanding than it did 5 years ago.
- WSO has a better debt/assets ratio than last year.
2.2 Solvency
- WSO has an Altman-Z score of 9.30. This indicates that WSO is financially healthy and has little risk of bankruptcy at the moment.
- WSO has a Altman-Z score of 9.30. This is amongst the best in the industry. WSO outperforms 93.62% 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 better Debt to FCF ratio (0.02) than 97.87% of its industry peers.
- A Debt/Equity ratio of 0.00 indicates that WSO is not too dependend on debt financing.
- The Debt to Equity ratio of WSO (0.00) is better than 85.11% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.02 | ||
| Altman-Z | 9.3 |
ROIC/WACC1.56
WACC9.55%
2.3 Liquidity
- WSO has a Current Ratio of 4.12. This indicates that WSO is financially healthy and has no problem in meeting its short term obligations.
- The Current ratio of WSO (4.12) is better than 91.49% of its industry peers.
- A Quick Ratio of 2.18 indicates that WSO has no problem at all paying its short term obligations.
- The Quick ratio of WSO (2.18) is better than 80.85% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 4.12 | ||
| Quick Ratio | 2.18 |
3. WSO Growth Analysis
3.1 Past
- The earnings per share for WSO have decreased by -8.57% 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 11.98% yearly.
- The Revenue has decreased by -4.98% in the past year.
- The Revenue has been growing slightly by 7.45% on average over the past years.
EPS 1Y (TTM)-8.57%
EPS 3Y-7.71%
EPS 5Y11.98%
EPS Q2Q%-29.11%
Revenue 1Y (TTM)-4.98%
Revenue growth 3Y-0.16%
Revenue growth 5Y7.45%
Sales Q2Q%-9.99%
3.2 Future
- WSO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 19.57% yearly.
- Based on estimates for the next years, WSO will show a quite strong growth in Revenue. The Revenue will grow by 8.44% on average per year.
EPS Next Y5.69%
EPS Next 2Y7.4%
EPS Next 3Y10.42%
EPS Next 5Y19.57%
Revenue Next Year1.62%
Revenue Next 2Y3.35%
Revenue Next 3Y4.23%
Revenue Next 5Y8.44%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. WSO Valuation Analysis
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 33.91 indicates a quite expensive valuation of WSO.
- WSO's Price/Earnings is on the same level as the industry average.
- Compared to an average S&P500 Price/Earnings ratio of 27.33, WSO is valued a bit more expensive.
- A Price/Forward Earnings ratio of 32.07 indicates a quite expensive valuation of WSO.
- The rest of the industry has a similar Price/Forward Earnings ratio as WSO.
- The average S&P500 Price/Forward Earnings ratio is at 38.16. WSO is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 33.91 | ||
| Fwd PE | 32.07 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, WSO is valued a bit more expensive than the industry average as 70.21% of the companies are valued more cheaply.
- Based on the Price/Free Cash Flow ratio, WSO is valued a bit cheaper than 70.21% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.14 | ||
| EV/EBITDA | 21.24 |
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.
- The excellent profitability rating of WSO may justify a higher PE ratio.
PEG (NY)5.96
PEG (5Y)2.83
EPS Next 2Y7.4%
EPS Next 3Y10.42%
5. WSO Dividend Analysis
5.1 Amount
- WSO has a Yearly Dividend Yield of 3.27%. Purely for dividend investing, there may be better candidates out there.
- WSO's Dividend Yield is rather good when compared to the industry average which is at 0.79. WSO pays more dividend than 93.62% 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 | 3.27% |
5.2 History
- The dividend of WSO is nicely growing with an annual growth rate of 11.59%!
- 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)11.59%
Div Incr Years12
Div Non Decr Years12
5.3 Sustainability
- WSO pays out 102.49% of its income as dividend. This is not a sustainable payout ratio.
- WSO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP102.49%
EPS Next 2Y7.4%
EPS Next 3Y10.42%
WSO Fundamentals: All Metrics, Ratios and Statistics
410.63
-5.64 (-1.35%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryTrading Companies & Distributors
Market Cap16.66B
Analysts66
PE33.91
Fwd PE32.07
ROIC/WACC1.56
Debt/Equity0
Debt/FCF0.02
OM9.57%
GM28.05%
PM (TTM)6.39%
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.27% |
Yearly Dividend10.64
Dividend Growth(5Y)11.59%
DP102.49%
Div Incr Years12
Div Non Decr Years12
Ex-Date04-16 2026-04-16 (3.3)
WATSCO INC / WSO Fundamental Analysis FAQ
What is the fundamental rating for WSO stock?
ChartMill assigns a fundamental rating of 7 / 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.
How profitable is WATSCO INC (WSO) stock?
WATSCO INC (WSO) has a profitability rating of 8 / 10.
Can you provide the financial health for WSO stock?
The financial health rating of WATSCO INC (WSO) is 9 / 10.
Can you provide the expected EPS growth for WSO stock?
The Earnings per Share (EPS) of WATSCO INC (WSO) is expected to grow by 5.69% in the next year.