CDW

Watsco, Inc.

Fundamental data last updated:July 11, 2026

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company profile

SECTOR

Industrials

industry

Industrial - Distribution

Exchange

NYSE

County of HQ

US

Next Earnings Date

07/29/2026

Business Summary

Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, refrigeration equipment, and related parts and supplies. The company distributes equipment comprising residential ducted and ductless air conditioners, such as gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. It also offers parts, including 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. The company serves contractors and dealers that service the replacement and new construction markets for residential and light commercial central air conditioning, heating, and refrigeration systems. As of December 31, 2021, it operated from 671 locations in the United States, Canada, Mexico, and Puerto Rico, as well as exports its products to Latin America and the Caribbean Basin. Watsco, Inc. was founded in 1945 and is headquartered in Miami, Florida.

 


VALUATION

P/E

28.27

Market Cap ($M USD)

$15.02B

Forward P/E

15.78

PEG

0.20

PRICE TO SALES

2.07

PRICE TO BOOK

5.08

EV / EBITDA

19.40

5-Year Average P/E

Free Cash Flow Yield

4.63%

DCF Value

$205.00

Graham Number

$146.24

Price to FCF

21.60

EV to FCF

21.72

Earnings Yield

3.54%

FCF Yield

4.63%

DIVIDEND

Yield

3.33%

Annual Payout

$12.30

Payout Ratio

98.08%

Consecutive Years of Dividend Growth

5-Year Dividend Growth Rate

Financial Health & Profitability

Earnings Per Share

$13.06

Next Year EPS Growth Estimate

$23.40

Next Year Revenue Growth Estimate

$952.70B

Return on Equity (ROE)

17.84%

FREE CASH FLOW

Operating Margin

9.84%

Debt-to-Equity

0.17

Piotroski F-Score

5

Altman Z-Score

9.54

Return on Invested Capital (ROIC)

19.27%

Current Ratio

3.34

Quick Ratio

1.54

Net Debt to EBITDA

0.11

Interest Coverage

0.00

Gross Profit margin

28.37%

FCF PER SHARE

$18.31

REVENUE PER SHARE

$190.74

Gainseekers Quantitative Analysis

Summary

Watsco, Inc. presents a perplexing valuation scenario. Despite a robust Altman Z-score of 10.19 indicating financial safety, the stock has traded significantly above its DCF value, suggesting potential overvaluation. The Forward P/E of 17.97 is more reasonable than its current P/E, hinting at expected earnings growth. However, the earnings yield of just 3.11% raises concerns about the stock’s attractiveness relative to other investments. The market seems to price in perfection, yet the Graham Number suggests a more conservative valuation.

AI Exposure / Tech Reliance

Operating in the industrial distribution sector, Watsco is strategically positioned to leverage AI and tech advancements to optimize supply chain efficiencies. This industry is ripe for digital transformation, offering opportunities to enhance inventory management and customer service. However, the company's traditional business model may face challenges in rapidly integrating cutting-edge technologies.

The Bull Case

For the discerning value or GARP investor, Watsco offers compelling strengths. A high ROIC of 19.27% underscores its capital efficiency, while a Piotroski F-Score of 5 indicates moderate financial health. The company's operating margin of 9.84% and a solid FCF yield, despite being low, suggest effective cost management and potential for cash flow improvement. These metrics collectively paint a picture of a company with strong pricing power and operational resilience.

The Bear Case

Yet, Watsco is not without its vulnerabilities. The Price/Book ratio of 5.78 and Price/Sales of 2.36 signal a rich valuation, potentially limiting upside. The stock's proximity to its 52-week high, coupled with a meager FCF yield, raises red flags about its current price level. Additionally, the high payout ratio of 98.08% leaves little room for dividend growth, potentially straining future cash flows.

Market Sentiment & Smart Money

Short Interest %

Analyst Consensus

Hold

Average Analyst Price Target

$399.80

Institutional Ownership %

1-Year Beta

1.10

Insider Buying % (6 Mo)

Distance to 52-Week High

34.02%

Distance to 52-Week Low

12.53%

EARNINGS SURPRISE %

8.09%

50-DAY SMA

$401.74

200-DAY SMA

$385.09

⚠️ Financial Disclaimer:
This content is for informational purposes only and is not financial advice. Information may be delayed or inaccurate. We may earn a commission from partner links.