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Watsco, Inc.

Rank #137ValueWatchlistCompare with other stocks

WSO · NYSE · Industrials

Watsco, Inc. (WSO) — Rank #137 by gross profitability (GP/assets 0.40) · ROE 16.6% · Piotroski F-Score N/A.

As-of 2026-10-30 · CIK 0000105016 · all metrics point-in-time as of the filing date.

About

Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, and refrigeration equipment, and related parts and supplies in the United States, Canada, Latin America, and the Caribbean.

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It distributes equipment, including residential ducted and ductless air conditioners, such as gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. The company also offers parts comprising replacement compressors, evaporator coils, motors, and other component parts; and supplies, such as thermostats, insulation materials, refrigerants, ductworks, grills, registers, sheet metals, tools, copper tubing, concrete pads, tapes, adhesives, and other ancillary supplies, as well as plumbing and bathroom remodeling supplies. It serves contractors and dealers that service the replacement and new construction markets for residential and light commercial central air conditioning, heating, and refrigeration systems. Watsco, Inc.

was incorporated in 1956 and is headquartered in Miami, Florida.

Industry
Industrial Distribution
Sector
Industrials
State
FL
Filer Category
Large accelerated filer
Fiscal Year End
December 31
Website
watsco.com

Company Snapshot

P/E and dividend yield are the primary valuation lenses for mature businesses.

Market Cap

$12.58B

P/E (annual)

—

P/S (annual)

1.7

P/B

4.2

P/OCF (annual)

22.1

Shareholder Yield

2.7%

Employees

6,950

Industry

Industrial Distribution

Exchange

NYSE

8/11

Flags passed

WSO fails 3 critical flags

Passes 8 of 11 quality flags

  • FAIL
    Revenue declining YoY

    Revenue contracted year over year

  • FAIL
    Operating margin declining

    Operating margin lower than prior year

  • FAIL
    Valuation convergence

    EPS declining, shares diluting, and revenue growth decelerating simultaneously

  • PASS
    Gross margin holding
  • PASS
    Dilution within 2%
  • PASS
    FCF not negative from investment
  • PASS
    Disclosure consistent
  • PASS
    Free cash flow intact
  • PASS
    Passes safety gate
  • PASS
    No competitive retreat
  • PASS
    SBC not compressing margin

Strengths Sequential beat (rev + EPS)

No data Balance sheet — not counted as a pass.

A count of the 12 warning flags that could be evaluated. Unweighted: colour follows the worst flag.

Quality Profile

Profitability

1/1 pass
GP / assets
0.40
Return on equity
16.6%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
0.46
Current ratio
3.20×
Net cash
$464.19M

Cash Flow

3/3 pass
Positive FCF
PASS
Cash-backed earnings
PASS
Accruals healthy
PASS
SBC / revenue
0.5%

Growth

1/2 pass
Revenue growth
-5.0%
Piotroski F-Score
N/A
Share dilution
1.0%

Dividend yield and payout ratio are the primary reads at this stage (trailing P/E — see valuation above).

Profitability

Does it make money well?

Warning: Operating margin declining, Revenue declining YoY · GP/assets 0.40

Gross profitability (GP / assets)

0.40

Primary signal (Novy-Marx).

6th of 9 SIC 50 peers

Return on equity

16.6%

Gross margin

28.0%

7th of 9 SIC 50 peers

Revenue growth (YoY)

-5.0%

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2022202320242025
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

-0.2%

Revenue CAGR (5Y)

7.4%

Earnings CAGR (3Y)

-6.1%

FCF CAGR (3Y)

-0.1%

Cash Flow Health

Is the cash real?

No warning flags · FCF 8% above net income

Free cash flow

$535.06M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF vs net income

7.7%

(FCF − net income) ÷ |net income|. Positive: cash above earnings. Negative: below.

FCF not below net income

Fails when free cash flow is below net income (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

0.5%

Stock-based comp intensity.

Balance Sheet Strength

Can it survive a storm?

No warning flags · net cash $464.19M

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

0.46

1st of 9 SIC 50 peers (best = lowest)

Current ratio

3.20×

1st of 9 SIC 50 peers

Quick ratio

1.41×

Net cash

$464.19M

Cash & equivalents minus total debt.

Piotroski F-Score

N/A

Only 8/9 components determinable.

Valuation

Is the price reasonable?

Warning: Valuation convergence

Dividend safety

Composite score

2.5 / 5

Fair
Payout ratio
95.3%1/5 Weak
FCF coverage
1.13×2/5 Fair
Dividend growth streak
10 yr5/5 Strong
Balance-sheet health
D/E 0.46 · IC N/A2/5 Fair

Capital allocation quality

Composite score

3.3 / 5

Good
Share count trend
1.0%2/5 Fair
Buyback timing
N/AN/A
Dividend growth consistency
10 yr5/5 Strong
Net debt trajectory
-1.1%3/5 Good

Lifecycle Phase History

20202025
Capital Return
Op. Leverage
Value

Price History

WSO+28.2% · +5.1% CAGRSPY+82.9% · +12.8% CAGR

View full financial statements →

Source filings on SEC EDGAR: 10-K annual reports · 10-Q quarterly reports