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WSO

WatscoNYSE:WSO Stock Report

Market Cap

US$10.2b

7D

0.3%

1Y

26.6%

Updated

26 Oct, 2021

Data

Company Financials +
WSO fundamental analysis
Snowflake Score
Valuation0/6
Future Growth2/6
Past Performance5/6
Financial Health6/6
Dividends4/6

WSO Overview

Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, and refrigeration equipment; and related parts and supplies in the United States, Canada, Mexico, and Puerto Rico.

Watsco Competitors

Boise Cascade

NYSE:BCC

US$2.3b

BlueLinx Holdings

NYSE:BXC

US$477.6m

Home Depot

NYSE:HD

US$389.6b

Danaher

NYSE:DHR

US$219.3b

Price History & Performance

Summary of all time highs, changes and price drops for Watsco
Historical stock prices
Current Share PriceUS$287.35
52 Week HighUS$216.25
52 Week LowUS$307.81
Beta0.75
1 Month Change3.52%
3 Month Change4.12%
1 Year Change26.58%
3 Year Change103.10%
5 Year Change112.81%
Change since IPO10,908.61%

Recent News & Updates

Oct 25
Estimating The Fair Value Of Watsco, Inc. (NYSE:WSO)

Estimating The Fair Value Of Watsco, Inc. (NYSE:WSO)

In this article we are going to estimate the intrinsic value of Watsco, Inc. ( NYSE:WSO ) by taking the forecast future...

Sep 09

Watsco Continues To Execute Very Well, But End-Market Demand And Valuation Are Concerns

Watsco has benefited from strong demand in residential HVAC, but the pace of that ongoing growth is very much up for debate, with tougher comps and moderating renovation/replacement activity. Management has successfully executed on a tuck-in M&A strategy for decades and that isn't stopping. Watsco has also been delivering meaningful benefits from a digitalization strategy that increases customer loyalty, reduces operating costs, and gives management useful actionable data. High-single-digit FCF growth and solid returns (ROIC, ROTA, et al) aren't enough to support a meaningfully higher fair value today.

Aug 24
Watsco (NYSE:WSO) Seems To Use Debt Rather Sparingly

Watsco (NYSE:WSO) Seems To Use Debt Rather Sparingly

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...

Aug 09
Investors Shouldn't Overlook The Favourable Returns On Capital At Watsco (NYSE:WSO)

Investors Shouldn't Overlook The Favourable Returns On Capital At Watsco (NYSE:WSO)

There are a few key trends to look for if we want to identify the next multi-bagger. Ideally, a business will show two...

Shareholder Returns

WSOUS Trade DistributorsUS Market
7D0.3%2.4%1.9%
1Y26.6%57.6%33.4%

Return vs Industry: WSO underperformed the US Trade Distributors industry which returned 57.6% over the past year.

Return vs Market: WSO underperformed the US Market which returned 33.4% over the past year.

Price Volatility

Is WSO's price volatile compared to industry and market?
WSO volatility
WSO Beta0.75
Industry Beta1.58
Market Beta1

Stable Share Price: WSO is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 2% a week.

Volatility Over Time: WSO's weekly volatility (2%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19455,800Albert Nahmadhttps://www.watsco.com

Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, and refrigeration equipment; and related parts and supplies in the United States, Canada, Mexico, and Puerto Rico. It offers residential ducted and ductless air conditioners, including gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. The company also provides parts comprising replacement compressors, evaporator coils, motors, and other component parts; and supplies, such as thermostats, insulation materials, refrigerants, ductworks, grills, registers, sheet metals, tools, copper tubing, concrete pads, tapes, adhesives, and other ancillary supplies, as well as plumbing and bathroom remodeling supplies.

Watsco Fundamentals Summary

How do Watsco's earnings and revenue compare to its market cap?
WSO fundamental statistics
Market CapUS$10.22b
Earnings (TTM)US$362.93m
Revenue (TTM)US$5.92b

28.0x

P/E Ratio

1.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
WSO income statement (TTM)
RevenueUS$5.92b
Cost of RevenueUS$4.39b
Gross ProfitUS$1.54b
ExpensesUS$1.17b
EarningsUS$362.93m

Last Reported Earnings

Sep 30, 2021

Next Earnings Date

n/a

Earnings per share (EPS)10.25
Gross Margin25.96%
Net Profit Margin6.13%
Debt/Equity Ratio0.08%

How did WSO perform over the long term?

See historical performance and comparison

Dividends

2.7%

Current Dividend Yield

72%

Payout Ratio

Valuation

Is Watsco undervalued compared to its fair value and its price relative to the market?

28.03x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: WSO ($287.35) is trading above our estimate of fair value ($280.97)

Significantly Below Fair Value: WSO is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: WSO is poor value based on its PE Ratio (28x) compared to the US Trade Distributors industry average (22.1x).

PE vs Market: WSO is poor value based on its PE Ratio (28x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: WSO is poor value based on its PEG Ratio (10.2x)


Price to Book Ratio

PB vs Industry: WSO is overvalued based on its PB Ratio (6.2x) compared to the US Trade Distributors industry average (2.4x).


Future Growth

How is Watsco forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

2.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: WSO's forecast earnings growth (2.7% per year) is above the savings rate (2%).

Earnings vs Market: WSO's earnings (2.7% per year) are forecast to grow slower than the US market (14.7% per year).

High Growth Earnings: WSO's earnings are forecast to grow, but not significantly.

Revenue vs Market: WSO's revenue (3.4% per year) is forecast to grow slower than the US market (9.9% per year).

High Growth Revenue: WSO's revenue (3.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: WSO's Return on Equity is forecast to be high in 3 years time (20.6%)


Past Performance

How has Watsco performed over the past 5 years?

12.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: WSO has high quality earnings.

Growing Profit Margin: WSO's current net profit margins (6.1%) are higher than last year (4.8%).


Past Earnings Growth Analysis

Earnings Trend: WSO's earnings have grown by 12.3% per year over the past 5 years.

Accelerating Growth: WSO's earnings growth over the past year (52.8%) exceeds its 5-year average (12.3% per year).

Earnings vs Industry: WSO earnings growth over the past year (52.8%) underperformed the Trade Distributors industry 52.8%.


Return on Equity

High ROE: WSO's Return on Equity (22.7%) is considered high.


Financial Health

How is Watsco's financial position?


Financial Position Analysis

Short Term Liabilities: WSO's short term assets ($2.0B) exceed its short term liabilities ($796.7M).

Long Term Liabilities: WSO's short term assets ($2.0B) exceed its long term liabilities ($272.7M).


Debt to Equity History and Analysis

Debt Level: WSO's debt to equity ratio (0.09%) is considered satisfactory.

Reducing Debt: WSO's debt to equity ratio has reduced from 16.9% to 0.09% over the past 5 years.

Debt Coverage: WSO's debt is well covered by operating cash flow (27916.1%).

Interest Coverage: WSO's interest payments on its debt are well covered by EBIT (692.6x coverage).


Balance Sheet


Dividend

What is Watsco current dividend yield, its reliability and sustainability?

2.71%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: WSO's dividend (2.71%) is higher than the bottom 25% of dividend payers in the US market (1.27%).

High Dividend: WSO's dividend (2.71%) is low compared to the top 25% of dividend payers in the US market (3.48%).


Stability and Growth of Payments

Stable Dividend: WSO's dividend payments have been volatile in the past 10 years.

Growing Dividend: WSO's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (72.4%), WSO's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: WSO's dividends in 3 years are forecast to be covered by earnings (71.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

14.0yrs

Average management tenure


CEO

Albert Nahmad (80 yo)

48.83yrs

Tenure

US$10,688,592

Compensation

Mr. Albert H. Nahmad has been the Chief Executive Officer of Watsco, Inc. since December 1972. Mr. Nahmad is a General Partner of Alna Capital Associates. Mr. Nahmad served as President of Watsco, Inc. fro...


CEO Compensation Analysis

Compensation vs Market: Albert's total compensation ($USD10.69M) is about average for companies of similar size in the US market ($USD11.15M).

Compensation vs Earnings: Albert's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: WSO's management team is seasoned and experienced (14 years average tenure).


Board Members

Experienced Board: WSO's board of directors are considered experienced (3.6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Watsco, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Watsco, Inc.
  • Ticker: WSO
  • Exchange: NYSE
  • Founded: 1945
  • Industry: Trading Companies and Distributors
  • Sector: Capital Goods
  • Market Cap: US$10.221b
  • Shares outstanding: 35.40m
  • Website: https://www.watsco.com

Number of Employees


Location

  • Watsco, Inc.
  • 2665 South Bayshore Drive
  • Suite 901
  • Miami
  • Florida
  • 33133
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/10/26 22:32
End of Day Share Price2021/10/26 00:00
Earnings2021/09/30
Annual Earnings2020/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.