Analyzing Watsco (WSO.B) and Its Peers

Valuation and Earnings

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

	Gross Revenue	Net Income	Price/Earnings Ratio
Watsco	$7.24 billion	$496.99 million	29.09
Watsco Competitors	$6.39 billion	$355.23 million	24.08

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

Risk and Volatility

Watsco has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, Watsco’s rivals have a beta of 1.28, indicating that their average share price is 28% more volatile than the S&P 500.

Insider and Institutional Ownership

0.1% of Watsco shares are held by institutional investors. Comparatively, 50.8% of shares of all “Trading Companies & Distributors” companies are held by institutional investors. 13.8% of Watsco shares are held by insiders. Comparatively, 16.7% of shares of all “Trading Companies & Distributors” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

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	6.53%	14.40%	10.17%
Watsco Competitors	2.85%	-34.21%	3.61%

Dividends

Watsco pays an annual dividend of $13.20 per share and has a dividend yield of 3.9%. Watsco pays out 114.5% 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 2.9% and pay out 36.6% of their earnings in the form of a dividend.

Summary

Watsco beats its rivals on 7 of the 11 factors compared.

Watsco Company Profile

Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, and refrigeration equipment; and related parts and supplies in the United States, Canada, Mexico, and Puerto Rico. It offers residential ducted and ductless air conditioners; gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. The company also provides parts comprising replacement compressors, evaporator coils, motors, and other component parts; and supplies, such as thermostats, insulation material, refrigerants, ductwork, grills, registers, sheet metal, tools, copper tubing, concrete pads, tapes, adhesives, and other ancillary 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. In addition, the company exports its products to Latin America and the Caribbean Basin. Watsco, Inc. was founded in 1945 and is headquartered in Miami, Florida.