Watsco Inc

Consumer Discretionary
Industrial Machinery/Components
www.watsco.com

Earnings Score
Moat Score
Safety Score
Final Score

Market Cap $21.14B
PE 41
Debt $428.36M
Cash $294.35M
EV $21.28B
FCF $660.78M

Earnings

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Sales & Net Margins

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Earnings	$521.99M
EBIT	$767.49M
ROE	17%
ROA	17%
FCF	$660.78M
Equity	$3.16B
Growth Stability	100%
PE	40.5
PEG	1.53
PB	6.69
P/FCF	32
P/S	2.83
Price/Cash	0.01
Debt/Equity	0.14
Debt/FCF	0.65
Net Margins	7%
Gross Margins	27%
Op. Margins	10%
Earnings CAGR	19%
Sales Growth YoY	2%
Sales Growth QoQ	1%
Sales CAGR	8%
FCF CAGR	13%
Equity CAGR	10%
Earnings Stability	0.9
Earnings Growth YoY	0%
Earnings Growth QoQ	-6%
Earnings CAGR 5Y	26%

Sales CAGR 5Y	12%
FCF CAGR 5Y	12%
Equity CAGR 5Y	14%
Earnings CAGR 3Y	5%
Sales CAGR 3Y	5%
FCF CAGR 3Y	41%
Equity CAGR 3Y	18%
Market Cap	$21.14B
Revenue	$7.47B
Dividend Yield	2%
Payout Ratio	79%
Assets	$4.52B
Total Debt	$428.36M
Cash	$294.35M
Shares Outstanding	40.13M
EV	21.28B
Earnings Score	95%
Moat Score	92%
Safety Score	97%
Final Score	95%
Working Capital	2.2B
Current Ratio	3.36
Gross Profit	$1.99B
Shares Growth 3y	3%
Equity Growth QoQ	4%
Equity Growth YoY	19%

Assets & ROA

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Stockholders Equity & ROE

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Watsco is the largest heating, ventilation, air-conditioning, and refrigeration products distributor in North America. The company primarily operates in the United States (90% of 2021 revenue) with significant exposure in the Sunbelt states. Watsco also has operations in Canada (6% of sales) and Latin America and the Caribbean (4% of sales). The company's customer base consists of more than 120,000 dealers and contractors that serve the replacement and new construction HVACR markets for residential and light commercial applications.

SEC Filings

Direct access to Watsco Inc (WSO) Annual Reports (10K) and Quarterly Reports (10Q) from the SEC website.

2024
- 10-Q Sep 30
- 10-Q Jun 30
- 10-Q Mar 31
2023
- 10-K Dec 31
- 10-Q Sep 30
- 10-Q Jun 30
- 10-Q Mar 31
2022
- 10-K Dec 31
- 10-Q Sep 30
- 10-Q Jun 30
- 10-Q Mar 31

Sector Comparison

How does Watsco Inc compare to its competitors?

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Peter Lynch's Chart

This chart shows the current pricing of Watsco Inc compared to its past. The addition of the earnings trend line provides further insights into the company's earnings power.

CAGR 19%

Stability 90%

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Watsco Inc Discounted Cash Flow

Fully customizable DCF calculator online for Watsco Inc.

Years

Calculation mode

= $16B

	0	1	2	3	4	5	6	7	8	9	10	TV
fcf	$661M	$744M	$839M	$945M	$1.1B	$1.2B	$1.4B	$1.5B	$1.7B	$1.9B	$2.2B	$22B
DCF		$677M	$693M	$710M	$727M	$744M	$762M	$781M	$799M	$819M	$838M	$8.4B
Value	$16B

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

Years	12/2014	12/2015	12/2016	12/2017	12/2018	12/2019	12/2020	12/2021	12/2022	12/2023	TTM
Net Margins	4%	4%	4%	4%	5%	5%	5%	6%	8%	7%	7%
ROA	-	19%	18%	17%	17%	14%	16%	20%	24%	21%	17%
ROE	-	13%	13%	12%	14%	13%	14%	19%	27%	21%	17%

Net Margins (7.49%)

Net Margins are at a level that is not too high nor too low. They are not a competitive advantage but they are not a competitive disadvantage either.

Safety and Stability

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Years	12/2014	12/2015	12/2016	12/2017	12/2018	12/2019	12/2020	12/2021	12/2022	12/2023	TTM
Debt over FCF	-	1.24	0.99	0.08	0.89	1.2	0.42	1.14	0.62	0.77	0.65
Debt over Equity	0.27	0.2	0.19	0.01	0.08	0.22	0.12	0.19	0.15	0.15	0.14
Growth Stability	-	-	-	100%	100%	100%	100%	100%	100%	100%	100%

Good Debt/FCF ratio (0.65)

Net Margins are high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Good Debt/Equity ratio (0.14)

The company is not overleveraged and has a good balance between equity and debt.

Good Graham’s Stability (100%)

The company has a good stability in its earnings, which is a sign of a good competitive advantage.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Years	12/2014	12/2015	12/2016	12/2017	12/2018	12/2019	12/2020	12/2021	12/2022	12/2023	CAGR 5Y
Revenue YoY growth	-	4%	3%	3%	5%	5%	6%	24%	16%	0%	12%
Earnings YoY growth	-	14%	5%	14%	17%	1%	9%	55%	58%	-11%	26%
Equity YoY growth	-	6%	4%	24%	3%	7%	4%	12%	13%	16%	14%
FCF YoY growth	-	60%	20%	21%	-47%	107%	63%	-37%	65%	-2%	12%