Watsco, Inc.: Strong price momentum but will it sustain?

Watsco, Inc. relative valuation is NEUTRAL and it has a fundamental analysis score of 53.

Our analysis is based on comparing Watsco, Inc. with the following peers – Hudson Technologies, Inc., Lennox International Inc., Beacon Roofing Supply, Inc., HD Supply Holdings, Inc., WESCO International, Inc., United Technologies Corporation, W.W. Grainger, Inc. and Pool Corporation (HDSN-US, LII-US, BECN-US, HDS-US, WCC-US, UTX-US, GWW-US and POOL-US).

Watsco, Inc. has shown good performance overall, both over the last one year (at 37.95%) as well as over the last month (at 25.77%). Share price performance over the last month, though has been lower than that over the last year. But Watsco, Inc.’s stock has done better than its overall peer group whose performance was 9.55% over the last month.

Company Snapshot

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It trades at a lower Price/Book multiple (0.81) than its peer median (3.12).
  • We classify WSO.B-US as Challenged because of its below median returns and the market’s relatively low growth expectations.
  • WSO.B-US’s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • WSO.B-US’s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While WSO.B-US’s revenues growth in recent years has been around the peer median, the stock’s below peer median P/E ratio suggests that the market likely sees the company’s long-term growth prospects to be fading.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • WSO.B-US has the financial and operating capacity to borrow quickly.
  • Our analysis rates Watsco, Inc. as NEUTRAL relative to its peers.

Share Price Performance

Considering peers, relative outperformance over the last year and the last month suggest a leading position.

WSO.B-US’s share price performance of 37.95% over the last 12 months is above peer median of 19.78%. The 30-day trend in its share price performance of 25.77% is also above the peer median of 9.55% suggesting that this company is a leading performer relative to its peers.

Share Price Performance

Quadrant label definitions. Hover to know more

Leading, Fading, Lagging, Rising

Relative Valuation

Relative Valuation
Fundamental Score

Watsco, Inc. is currently neutrally valued, as its previous close of USD 194.43 lies within the CapitalCube estimate range of USD 187.27 to USD 202.42. Over the last 52 week period, Watsco, Inc. has fluctuated between USD 128.86 and USD 229.77.

Valuation & Peer Metrics

A complete list of valuation metrics is available on the company page.

Company Profile

Watsco, Inc. engages in distribution of air conditioning, heating and refrigeration equipment and related parts. Its products include residential central air conditioners, gas, electric and oil furnaces, commercial air conditioning and heating equipment and systems, and other specialized equipment; parts, including replacement compressors, evaporator coils, motors and other component parts; and supplies, including thermostats, insulation material, refrigerants, ductwork, grills, registers, sheet metal, tools, copper tubing, concrete pads, tape, adhesives, and other ancillary supplies. The company was founded by William Wagner in 1956 and is headquartered in Miami, FL.

Disclaimer

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