NYSE:WSO

Stock Analysis Report

Executive Summary

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.

Snowflake

Fundamentals

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


Similar Companies

Share Price & News

How has Watsco's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-3.2%

NYSE:WSO

-0.2%

US Trade Distributors

-0.3%

US Market


1 Year Return

-15.2%

NYSE:WSO

-12.0%

US Trade Distributors

3.4%

US Market

WSO underperformed the Trade Distributors industry which returned -12% over the past year.

WSO underperformed the Market in United States of America which returned 3.4% over the past year.


Share holder returns

WSOIndustryMarket
7 Day-3.2%-0.2%-0.3%
30 Day-2.6%0.8%2.9%
90 Day4.0%-6.7%2.1%
1 Year-11.6%-15.2%-10.5%-12.0%5.7%3.4%
3 Year23.2%11.2%33.9%27.9%45.8%36.2%
5 Year98.1%70.2%16.8%8.8%58.9%41.3%

Price Volatility Vs. Market

How volatile is Watsco's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Watsco undervalued based on future cash flows and its price relative to the stock market?

24.26x

Price to Earnings (PE) ratio


Intrinsic Value Based on Future Cash Flows

Watsco's share price is above the future cash flow value, it's not available at a moderate discount (< 20%).

Watsco's share price is above the future cash flow value, it's not available at a substantial discount (< 40%).


Price Based on Earnings

Watsco is overvalued based on earnings compared to the US Trade Distributors industry average.

Watsco is overvalued based on earnings compared to the United States of America market.


Price Based on Expected Growth

Watsco is poor value based on expected growth next year.


Price Based on Value of Assets

Watsco is overvalued based on assets compared to the US Trade Distributors industry average.


Next Steps

Future Growth

How is Watsco expected to perform in the next 1 to 3 years based on estimates from 11 analysts?

7.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Watsco's revenue is expected to grow by 3% yearly, however this is not considered high growth (20% yearly).

Watsco's earnings are expected to grow by 7.2% yearly, however this is not considered high growth (20% yearly).

Watsco's revenue growth is positive but not above the United States of America market average.

Watsco's earnings growth is positive but not above the United States of America market average.

Watsco's earnings growth is expected to exceed the low risk savings rate of 2.7%.


Earnings per Share Growth Estimates


Future Return on Equity

Watsco is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).


Next Steps

Past Performance

How has Watsco performed over the past 5 years?

11.5%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Watsco's year on year earnings growth rate has been positive over the past 5 years.

Watsco's 1-year earnings growth exceeds its 5-year average (12.4% vs 11.5%)

Watsco's earnings growth has exceeded the US Trade Distributors industry average in the past year (12.4% vs -8.2%).


Return on Equity

Watsco has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).


Return on Assets

Watsco used its assets more efficiently than the US Trade Distributors industry average last year based on Return on Assets.


Return on Capital Employed

Watsco's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).


Next Steps

Financial Health

How is Watsco's financial position?


Financial Position Analysis

Watsco is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.

Watsco's cash and other short term assets cover its long term commitments.


Debt to Equity History and Analysis

Watsco's level of debt (8.9%) compared to net worth is satisfactory (less than 40%).

The level of debt compared to net worth has been reduced over the past 5 years (20.3% vs 8.9% today).

Debt is well covered by operating cash flow (185.8%, greater than 20% of total debt).

Interest payments on debt are well covered by earnings (EBIT is 123.3x coverage).


Balance Sheet

High level of physical assets or inventory.

Debt is covered by short term assets, assets are 10.4x debt.


Next Steps

Dividend

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

3.94%

Expected Dividend Yield


Dividend Yield and Payments Analysis

Watsco's pays a higher dividend yield than the bottom 25% of dividend payers in United States of America (1.43%).

Watsco's dividend is above the markets top 25% of dividend payers in United States of America (3.76%).

Dividends per share have been volatile in the past 10 years (annual drop of over 20%).

Dividends per share have increased over the past 10 years.


Current Payout to Shareholders

Dividends paid are not well covered by earnings (1.1x coverage).


Future Payout to Shareholders

Dividends after 3 years are expected to be covered by earnings (1.2x coverage).


Next Steps

Management

What is the CEO of Watsco's salary, the management and board of directors tenure and is there insider trading?

7.9yrs

Average management tenure


CEO

Albert Nahmad (78yo)

46.6yrs

Tenure

US$7,117,698

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. from  ...


CEO Compensation Analysis

Albert's remuneration is about average for companies of similar size in United States of America.

Albert's compensation has been consistent with company performance over the past year, both up more than 20%.


Management Age and Tenure

7.9yrs

Average Tenure

61yo

Average Age

The average tenure for the Watsco management team is over 5 years, this suggests they are a seasoned and experienced team.


Board Age and Tenure

3.7yrs

Average Tenure

71yo

Average Age

The tenure for the Watsco board of directors is about average.


Insider Trading

No 3 month individual insider trading information.


Recent Insider Transactions

SellUS$353,16621 Dec 18
Barry Logan
EntityIndividual
Role
Senior VP & Secretary
Shares2,500
Max PriceUS$141.27

Ownership Breakdown


Management Team

  • Albert Nahmad (78yo)

    Chairman & CEO

    • Tenure: 46.6yrs
    • Compensation: $7.12m
  • Barry Logan (56yo)

    Senior VP & Secretary

    • Tenure: 15.7yrs
    • Compensation: $409.99k
  • Ana Menendez (54yo)

    CFO, Treasurer & Assistant Secretary

    • Tenure: 15.7yrs
    • Compensation: $331.19k
  • Paul Johnston (66yo)

    Executive Vice President

    • Tenure: 5.3yrs
    • Compensation: $872.05k
  • A. J. Nahmad (38yo)

    President & Director

    • Tenure: 3.5yrs
    • Compensation: $3.88m
  • Stephen Rush (69yo)

    Executive VP & COO

    • Tenure: 0.3yrs
  • Steven Rupp

    Chief Technology Officer

    • Tenure: 7.9yrs

Board Members

  • Cesar Alvarez (71yo)

    Co-Vice Chairman of the Board

    • Compensation: $84.80k
  • A. J. Nahmad (38yo)

    President & Director

    • Tenure: 7.7yrs
    • Compensation: $3.88m
  • Bob Moss (71yo)

    Co-Vice Chairman of the Board

    • Compensation: $84.80k
  • Denise Dickins (57yo)

    Lead Independent Director

    • Compensation: $182.20k
  • Slava Rubin (40yo)

    Director

    • Tenure: 1.3yrs
    • Compensation: $84.80k
  • George Sape (75yo)

    Director

    • Tenure: 3.7yrs
    • Compensation: $111.00k
  • J. Custer (56yo)

    Director

  • Brian Keeley (74yo)

    Director

    • Tenure: 1.3yrs
    • Compensation: $106.00k
  • Albert Nahmad (78yo)

    Chairman & CEO

    • Tenure: 46.6yrs
    • Compensation: $7.12m

Company Information

Watsco, Inc.'s company bio, 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$5.963b
  • Shares outstanding: 37.63m
  • Website: Click here

Number of Employees


Location

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

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
WSONYSE (New York Stock Exchange)YesCommon StockUSUSDJun 1984
WC3DB (Deutsche Boerse AG)YesCommon StockDEEURJun 1984
WSO.BNYSE (New York Stock Exchange)Class B Common StockUSUSDApr 1968

Biography

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 of ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/07/18 23:49
End of Day Share Price2019/07/18 00:00
Earnings2019/03/31
Annual Earnings2018/12/31


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.