Morningstar

Watsco Inc Ordinary Shares WSO

Morningstar Rating
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Stock XNYS Rating as of
$301.04 −4.29 (1.41%)
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As of Delayed Price Closed

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Price vs Fair Value

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WSO is trading at a LOCK|W@zZN premium.
Price
$301.04
Fair Value
LOCK|Y!
Uncertainty
LOCK|?Ggd
1-Star Price
LOCK|>.XCX
5-Star Price
LOCK|?.k$
Economic Moat
LOCK|yl$QQ
Capital Allocation
LOCK|Fl#H!#X

Bulls Say, Bears Say

Bulls

The company achieves a larger market share, either through organic growth (expanding its store/distribution footprint) or through acquisitions. The market is highly fragmented, so an M&A-driven growth strategy has a long runway.

Bears

OEMs disintermediate third-party distributors to capture more control/economics. We see that industry leaders pursue a wide range of strategies, and it is unclear which is the best approach.

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Trading Information

Previous Close Price
$305.33
Day Range
$280.18–302.39
52-Week Range
$277.34–459.00
Bid/Ask
$281.00 / $334.99
Shares Outstanding
41.64M
Market Cap
$12.54B
Volume/Avg
— / 570,333

Key Statistics

Price/Earnings (Normalized)
26.11
Price/Sales
1.64
Dividend Yield (Trailing)
4.29%
Dividend Yield (Forward)
4.38%
Dividend Payment Schedule
Jan, Apr, Jul, Oct
Total Yield
4.33%

Company Profile

Watsco is the largest HVAC and refrigeration products distributor in North America with approximately 13% market share. The company primarily operates in the United States (90% of revenue) with significant exposure in the Sun Belt states. Watsco also has operations in Canada, Latin America, and the Caribbean. The company's customer base comprises more than 120,000 dealers and contractors serving the replacement and new-construction HVAC/R markets for residential and light-commercial applications. As much as 20% of residential HVAC units are distributed through Watsco in any given year. Revenue is approximately 75%-80% residential HVAC and 20%-25% commercial, with relatively small exposure to more complex “applied” solutions.
Sector
Industrials
Industry
Industrial Distribution
Stock Style Box
Small Value
Total Number of Employees
7,050
Website
https://www.watsco.com

Competitors

Valuation

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Metric
WSO
CARR
LII
Price/Earnings (Normalized)
 26.1123.7016.54
Price/Book Value
 4.103.639.91
Price/Sales
 1.642.212.46
Price/Cash Flow
 19.0121.2113.15
Price/Earnings
WSO
CARR
LII

Financial Strength

Metric
WSO
CARR
LII
Quick Ratio
 1.410.500.67
Current Ratio
 3.201.021.57
Interest Coverage
 —3.6616.93
Quick Ratio
WSO
CARR
LII

Profitability

Metric
WSO
CARR
LII
Return on Assets (Normalized)
 12.54%5.48%21.03%
Return on Equity (Normalized)
 20.83%14.82%74.87%
Return on Invested Capital (Normalized)
 15.19%9.18%31.11%
Return on Assets
WSO
CARR
LII

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