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Watsco, Inc.

Rank #139Value

WSO-B · NYSE · Industrials

Watsco, Inc. (WSO-B) — Rank #139 by gross profitability (GP/assets 0.40) · ROE 16.6% · Piotroski F-Score N/A.

As-of 2026-09-15 · 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

Price History

WSO-B+31.0% · +5.6% CAGRSPY+80.5% · +12.5% CAGR

Company Snapshot

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

Market Cap

$12.89B

P/E (annual)

25.5

P/S (annual)

1.8

P/B

4.3

P/OCF (annual)

22.6

Shareholder Yield

2.6%

Employees

6,950

Industry

Industrial Distribution

Exchange

NYSE

Signal Flags

1 green3 red
Sequential beat (rev + EPS)Both revenue and EPS exceeded prior quarter — 2-quarter streak
Revenue declining YoYRevenue contracted year over year
Operating margin decliningOperating margin lower than prior year
Valuation convergenceEPS declining, shares diluting, and revenue growth decelerating simultaneously

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%

Terry Smith quality gate

Passes 1/5 Terry Smith thresholds

1 of 5 threshold not computable from filed data.

What Growth Is Priced In

Implied revenue growth (10Y)

9.1%

incredible deal

The annual FCF growth rate today's price requires over a 10-year horizon (discount rate 10%, terminal growth 2.5%).

Dilution drag: 1.0% — per-share value needs a total required return of 10.1% once share-count change is priced in.

vs. own 6-year median revenue growth: 5.3%

priced above its own history

Cost-of-equity sensitivity (implied growth at different discount rates)

r = 8%

4.7%

r = 10% (base)

9.1%

r = 12%

12.9%

Net debt / market cap: -3.9%

Base FCF: $535.1M3Y mean FCF: $601.5M

Valuation History

Current multiple vs historical range at each filing date. Band spans 25th-75th percentile.

P / E

Price / diluted EPS

34.2xExpensive
19.8xmed 28.5x37.7x

P / S

Price / revenue per share

2.2xExpensive
1.1xmed 1.2x2.2x

P / B

Price / book value per share

5.7xExpensive
3.7xmed 5.0x6.0x

P / GP

Price / gross profit per share

7.8xExpensive
4.5xmed 5.1x7.8x

P / FCF

Price / free cash flow per share

29.7xExpensive
16.6xmed 21.3x32.7x

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

Profitability

Gross profitability (GP / assets)

0.40

Primary signal (Novy-Marx).

4th of 9 SIC 50 peers

Return on equity

16.6%

Gross margin

28.0%

6th 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%

Anti-fragile safety

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.

Recession resistance

Revenue through recessions

Worst single-year YoY revenue decline, 18 years of history

Strong
2008-2009 (GFC)
17.7%Grew through it
2020 (COVID)
6.0%Grew through it
Worst year on record(any fiscal year, not recession-limited)
-5.0%Mild decline

Cash-flow health

Free cash flow

$535.06M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF / net income

0.08

Cash-backing of earnings.

FCF/NI divergence

Unfavorable divergence (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

0.5%

Stock-based comp intensity.

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

Piotroski F-Score

F-Score

N/A

Only 8/9 components determinable.

Lifecycle Phase History

20202025
Capital Return
Op. Leverage
Value
View full financial statements →