Stock Analysis

What Does Watsco, Inc.'s (NYSE:WSO) Share Price Indicate?

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NYSE:WSO
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Watsco, Inc. (NYSE:WSO), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Watsco’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Watsco

What's The Opportunity In Watsco?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% below my intrinsic value, which means if you buy Watsco today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $309.20, then there’s not much of an upside to gain from mispricing. In addition to this, Watsco has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Watsco generate?

earnings-and-revenue-growth
NYSE:WSO Earnings and Revenue Growth October 2nd 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 6.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Watsco, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in WSO’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on WSO, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Watsco, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Watsco you should be aware of.

If you are no longer interested in Watsco, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Watsco is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NYSE:WSO

Watsco

Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, refrigeration equipment, and related parts and supplies.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth1
Past Performance5
Financial Health6
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet with solid track record and pays a dividend.