Financial Review: Watsco (WSO) and Its Peers

Watsco (NYSE:WSO) is one of 157 public companies in the “Trading Companies & Distributors” industry, but how does it contrast to its rivals? We will compare Watsco to related companies based on the strength of its analyst recommendations, risk, institutional ownership, valuation, earnings, dividends and profitability.

Profitability

This table compares Watsco and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Watsco	6.31%	13.97%	9.69%
Watsco Competitors	1.06%	-34.39%	3.54%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Watsco and its rivals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Watsco	0	8	2	0	2.20
Watsco Competitors	1462	4912	6711	239	2.43

Watsco presently has a consensus price target of $373.62, suggesting a potential upside of 19.79%. As a group, “Trading Companies & Distributors” companies have a potential upside of 12.21%. Given Watsco’s higher possible upside, research analysts clearly believe Watsco is more favorable than its rivals.

Institutional and Insider Ownership

89.7% of Watsco shares are held by institutional investors. Comparatively, 50.5% of shares of all “Trading Companies & Distributors” companies are held by institutional investors. 12.9% of Watsco shares are held by company insiders. Comparatively, 17.3% of shares of all “Trading Companies & Distributors” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Watsco has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Watsco’s rivals have a beta of 1.32, indicating that their average share price is 32% more volatile than the S&P 500.

Dividends

Watsco pays an annual dividend of $13.20 per share and has a dividend yield of 4.2%. Watsco pays out 116.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Trading Companies & Distributors” companies pay a dividend yield of 2.7% and pay out 34.8% of their earnings in the form of a dividend. Watsco has raised its dividend for 13 consecutive years.

Earnings & Valuation

This table compares Watsco and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Watsco	$7.24 billion	$496.99 million	27.55
Watsco Competitors	$6.81 billion	$363.16 million	33.64

Watsco has higher revenue and earnings than its rivals. Watsco is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Summary

Watsco beats its rivals on 8 of the 15 factors compared.

About Watsco

Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, refrigeration equipment, and related parts and supplies in the United States and internationally. The company 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. It 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. 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. Watsco, Inc. was incorporated in 1956 and is headquartered in Miami, Florida.