Is Watsco Stock a Good Investment?

Watsco Investment Advice

WSO

To provide specific investment advice or recommendations on Watsco Inc stock, we recommend investors consider the following general factors when evaluating Watsco Inc. This will help you to make an informed decision on whether to include Watsco in one of your diversified portfolios:

Examine Watsco's financial health by looking at its balance sheet, income statement, and cash flow statement. Analyze key financial ratios, such as Price-to-Earnings (P/E), Price-to-Sales (P/S), and Price-to-Book (P/B), to determine whether the stock is fairly valued or over/undervalued.
Research Watsco's leadership team and their track record. Good management can help Watsco navigate difficult times and make strategic decisions that benefit shareholders and increases its net worth.
Consider the overall health of the Trading Companies & Distributors space and any emerging trends that could impact Watsco's business and its evolving consumer preferences.
Compare Watsco's performance and market position to its competitors. Analyze how Watsco is positioned in terms of product offerings, innovation, and market share.
Check if Watsco pays a dividend and its dividend yield and payout ratio.
Review what financial analysts are saying about Watsco's stock and their price targets. However, remember that analysts' opinions can vary, and their predictions may not always be accurate.

It's important to note that investing in Watsco Inc stock, carries risks, and you should carefully consider your investment goals and risk tolerance before making any investment decisions. Also, remember that it's important for investors to have a long-term perspective and a well-diversified portfolio to manage the impact of stock market volatility on their investments. Below is a detailed guide on how to decide if Watsco Inc is a good investment.

Sell

Buy

Sell

Macroaxis provides trade recommendation on Watsco to complement and cross-verify current analyst consensus on Watsco Inc. Our trade advice engine determines the company's potential to grow exclusively from the perspective of an investor's current risk tolerance and investing horizon. To make sure Watsco Inc is not overpriced, please check out all Watsco Inc fundamentals, including its book value per share, and the relationship between the net income and number of employees . Given that Watsco Inc has a price to earning of 36.34 X, we strongly advise you to confirm Watsco Inc market performance and probability of bankruptcy to ensure the company can sustain itself in the current economic cycle given your prevalent risk tolerance and investing horizon.

Market Performance	OK	Details
Volatility	Very steady	Details
Hype Condition	Low key	Details
Current Valuation	Overvalued	Details
Odds Of Distress	Very Small	Details
Economic Sensitivity	Responds to the market	Details
Investor Sentiment	Alarmed	Details
Analyst Consensus	Buy	Details
Financial Strenth (F Score)	Strong	Details
Financial Leverage	Not Rated	Details
Reporting Quality (M-Score)	Possible Manipulator	Details

Examine Watsco Stock

Researching Watsco's stock involves analyzing various aspects of the company and its industry to make an informed investment decision. The key areas to focus on are fundamentals, business model and competitive advantage. It is also important to analyze trends in revenue, net income, and cash flow, as well as key financial ratios, such as price-to-earnings (P/E), price-to-sales (P/S), and debt-to-equity (D/E). About 99.0% of the company outstanding shares are owned by institutional investors. The company recorded earning per share (EPS) of 13.01. Watsco Inc last dividend was issued on the 16th of October 2024. The entity had 3:2 split on the 17th of August 1998.

To determine if Watsco is a good investment, evaluating the company's potential for future growth is also very important. This may include expanding into new markets, launching new products or services, or improving operational efficiency. Companies with strong growth prospects can be more attractive investments. This aspect of the research should be conducted in the context of the overall market and industry in which the company operates and should include an analysis of growth potential, competitive landscape, and any regulatory or economic factors that could impact the business. Some of the essential points regarding Watsco's research are outlined below:

	Watsco Inc is unlikely to experience financial distress in the next 2 years
	Watsco Inc has a strong financial position based on the latest SEC filings
	Over 99.0% of the company outstanding shares are owned by institutional investors
	On 31st of October 2024 Watsco paid $ 2.7 per share dividend to its current shareholders
	Latest headline from investors.com: Stocks Showing Improving Market Leadership Watsco Earns 83 RS Rating

Watsco Quarterly Good Will

458.83 Million

Watsco uses earnings reports to provide investors with an update of all three financial statements, including the income statement, the balance sheet, and the cash flow statement. Therefore, it is also crucial when considering investing in Watsco Inc. Every quarterly earnings report provides investors with an overview of sales, expenses, and net income for the most recent period. It also may provide a comparison to Watsco's previous reporting period. The quarterly earnings reports are usually disseminated to the public via Form 10-Q, which is a legal document filed with the Securities and Exchange Commission every quarter.

	15th of February 2024 Upcoming Quarterly Report	View
	18th of April 2024 Next Financial Report	View
	31st of December 2023 Next Fiscal Quarter End	View
	15th of February 2024 Next Fiscal Year End	View
	30th of September 2023 Last Quarter Report	View
	31st of December 2022 Last Financial Announcement	View

Earnings surprises can significantly impact Watsco's stock price both in the short term and over time. Negative earnings surprises usually result in a price decline. However, it has been seen that positive earnings surprises lead to an immediate rise in a stock's price and a gradual increase over time. This is why we often hear news about some companies beating earning projections. Financial analysts spend a large amount of time predicting earnings per share (EPS) along with other important future indicators. Many analysts use forecasting models, management guidance, and additional fundamental information to derive an EPS estimate. Below are the table of largest EPS Surprises Watsco's investors have experienced.

Reported	Fiscal Date	Estimated EPS	Reported EPS	Surprise
2002-02-14	2001-12-31	0.05	0.04	-0.01	20
2001-04-27	2001-03-31	0.08	0.09	0.01	12
1999-04-15	1999-03-31	0.07	0.08	0.01	14
1996-04-16	1996-03-31	0.07	0.08	0.01	14
1996-03-12	1995-12-31	0.07	0.08	0.01	14
2003-02-19	2002-12-31	0.07	0.05	-0.02	28
2002-04-23	2002-03-31	0.09	0.11	0.02	22
2005-04-21	2005-03-31	0.3	0.33	0.03	10

Know Watsco's Top Institutional Investors

Have you ever been surprised when a price of an equity instrument such as Watsco is soaring high without any particular reason? This is usually happening because many institutional investors are aggressively trading Watsco Inc backward and forwards among themselves. Watsco's institutional investor refers to the entity that pools money to purchase Watsco's securities or originate loans. Institutional investors include commercial and private banks, credit unions, insurance companies, pension funds, hedge funds, endowments, and mutual funds. Operating companies that invest excess capital in these types of assets may also be included in the term and may influence corporate governance by exercising voting rights in their investments.

		Shares
Neuberger Berman Group Llc	2024-06-30	599.2 K
Markel Group Inc	2024-06-30	571.2 K
Wellington Management Company Llp	2024-06-30	523.9 K
Wells Fargo & Co	2024-06-30	488.1 K
Barclays Plc	2024-06-30	458.9 K
Jpmorgan Chase & Co	2024-06-30	422.2 K
Bank Of New York Mellon Corp	2024-06-30	393 K
Raymond James & Associates	2024-09-30	358.2 K
Boston Financial Mangement Inc	2024-06-30	346.8 K
Blackrock Inc	2024-06-30	3.8 M
Fmr Inc	2024-09-30	3.6 M

Note, although Watsco's institutional investors appear to be way more sophisticated than retail investors, it remains unclear if professional active investment managers can reliably enhance risk-adjusted returns by an amount that exceeds fees and expenses.

Watsco's market capitalization trends

The company currently falls under 'Large-Cap' category with a total capitalization of 21.46 B.

Market Cap

16.44 Billion

Watsco's profitablity analysis

	Last Reported	Projected for Next Year
Return On Tangible Assets	0.18	0.18
Return On Capital Employed	0.26	0.13
Return On Assets	0.14	0.15
Return On Equity	0.24	0.25

The company has Net Profit Margin of 0.07 %, which implies that it may need a different competitive strategy as even a very small decline in it revenue may erase profits and result in a net loss. This is way below average. In the same way, it shows Net Operating Margin of 0.11 %, which entails that for every 100 dollars of revenue, it generated $0.11 of operating income.

Determining Watsco's profitability involves analyzing its financial statements and using various financial metrics to determine if Watsco is a good buy. For example, gross profit margin measures Watsco's profitability after accounting for the cost of goods sold, while net profit margin measures profitability after accounting for all expenses. Other important metrics include return on assets, return on equity, and free cash flow. By reviewing multiple sources and metrics, you can gain a complete picture of Watsco's profitability and make more informed investment decisions.

Watsco's Earnings Breakdown by Geography

Evaluate Watsco's management efficiency

Watsco Inc has Return on Asset of 0.1053 % which means that on every $100 spent on assets, it made $0.1053 of profit. This is way below average. In the same way, it shows a return on shareholders' equity (ROE) of 0.2122 %, implying that it generated $0.2122 on every 100 dollars invested. Watsco's management efficiency ratios could be used to measure how well Watsco manages its routine affairs as well as how well it operates its assets and liabilities. At this time, Watsco's Return On Tangible Assets are very stable compared to the past year. As of the 22nd of November 2024, Return On Assets is likely to grow to 0.15, while Return On Capital Employed is likely to drop 0.13. At this time, Watsco's Return On Assets are very stable compared to the past year.

	Last Reported	Projected for Next Year
Book Value Per Share	70.23	73.74
Tangible Book Value Per Share	51.75	54.33
Enterprise Value Over EBITDA	19.65	20.63
Price Book Value Ratio	7.02	7.37
Enterprise Value Multiple	19.65	20.63
Price Fair Value	7.02	7.37
Enterprise Value	15.8 B	16.6 B

Leadership at Watsco emphasizes sustainable growth and financial prudence. Our analysis evaluates how these priorities impact the stock's performance in the market.

Dividend Yield

0.0203

Forward Dividend Yield

0.0203

Forward Dividend Rate

10.8

Beta

0.874

Basic technical analysis of Watsco Stock

As of the 22nd of November, Watsco maintains the Downside Deviation of 1.7, market risk adjusted performance of 0.1458, and Mean Deviation of 1.34. Relative to fundamental indicators, the technical analysis model lets you check existing technical drivers of Watsco Inc, as well as the relationship between them.

Watsco's insider trading activities

Some recent studies suggest that insider trading raises the cost of capital for securities issuers and decreases overall economic growth. Trading by specific Watsco insiders, such as employees or executives, is commonly permitted as long as it does not rely on Watsco's material information that is not in the public domain. Local jurisdictions usually require such trading to be reported in order to monitor insider transactions. In many U.S. states, trading conducted by corporate officers, key employees, directors, or significant shareholders must be reported to the regulator or publicly disclosed, usually within a few business days of the trade. In these cases Watsco insiders are required to file a Form 4 with the U.S. Securities and Exchange Commission (SEC) when buying or selling shares of their own companies.

		J Custer over a month ago Disposition of 1667 shares by J Custer of Watsco at 260.28 subject to Rule 16b-3
		Aaron Nahmad over a month ago Discretionary transaction by Aaron Nahmad of tradable shares of Watsco subject to Rule 16b-3
		Brian Keeley over six months ago Disposition of tradable shares by Brian Keeley of Watsco subject to Rule 16b-3
		Tapella Gary L over a year ago Watsco exotic insider transaction detected

Watsco's Outstanding Corporate Bonds

Watsco issues bonds to finance its operations. Corporate bonds make up one of the largest components of the U.S. bond market, which is considered the world's largest securities market. Watsco Inc uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt. Most Watsco bonds can be classified according to their maturity, which is the date when Watsco Inc has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.

	Dana 575 percent Corp Bond US235822AB96	View
	Boeing Co 2196 Corp Bond US097023DG73	View
	MPLX LP 52 Corp Bond US55336VAL45	View
	Morgan Stanley 3971 Corp Bond US61744YAL20	View
	AerCap Global Aviation Corp Bond US00773HAA59	View

View All Watsco Corporate Bonds

Understand Watsco's technical and predictive indicators

Using predictive indicators to make investment decisions involves analyzing Watsco's various financial and market-based factors to help forecast future trends and identify investment opportunities. Select the indicators that are most relevant to your investment strategy. Each indicator has its own strengths and weaknesses, so it's essential to combine multiple indicators to get a more comprehensive view of the market and reduce the risk of making poor decisions based on limited data.

	Risk Adjusted Performance	0.098
	Market Risk Adjusted Performance	0.1458
	Mean Deviation	1.34
	Semi Deviation	1.52
	Downside Deviation	1.7
	Coefficient Of Variation	815.11
	Standard Deviation	1.7
	Variance	2.9
	Information Ratio	0.0666
	Jensen Alpha	0.0738
	Total Risk Alpha	0.0058
	Sortino Ratio	0.0667
	Treynor Ratio	0.1358
	Maximum Drawdown	9.11
	Value At Risk	(3.18)
	Potential Upside	2.23
	Downside Variance	2.89
	Semi Variance	2.32
	Expected Short fall	(1.43)
	Skewness	(0.01)
	Kurtosis	1.34

	Risk Adjusted Performance	0.098
	Market Risk Adjusted Performance	0.1458
	Mean Deviation	1.34
	Semi Deviation	1.52
	Downside Deviation	1.7
	Coefficient Of Variation	815.11
	Standard Deviation	1.7
	Variance	2.9
	Information Ratio	0.0666
	Jensen Alpha	0.0738
	Total Risk Alpha	0.0058
	Sortino Ratio	0.0667
	Treynor Ratio	0.1358
	Maximum Drawdown	9.11
	Value At Risk	(3.18)
	Potential Upside	2.23
	Downside Variance	2.89
	Semi Variance	2.32
	Expected Short fall	(1.43)
	Skewness	(0.01)
	Kurtosis	1.34

Consider Watsco's intraday indicators

Watsco intraday indicators are useful technical analysis tools used by many experienced traders. Just like the conventional technical analysis, daily indicators help intraday investors to analyze the price movement with the timing of Watsco stock daily movement. By combining multiple daily indicators into a single trading strategy, you can limit your risk while still earning strong returns on your managed positions.

	Accumulation Distribution	5771.31
	Rate Of Daily Change	1.0
	Day Median Price	540.43
	Day Typical Price	542.37
	Market Facilitation Index	1.0E-4
	Price Action Indicator	5.81
	Relative Strength Index	58.31

Watsco Corporate Filings

8K	15th of November 2024 Report filed with the SEC to announce major events that shareholders should know about	View Verify
13A	8th of November 2024 An amended filing to the original Schedule 13G	View Verify
ASR	4th of November 2024 Automatic Shelf Registration Statement under Rule 415 filed with the U.S. Securities and Exchange Commission (SEC)	View Verify
10Q	1st of November 2024 Quarterly performance report mandated by Securities and Exchange Commission (SEC), to be filed by publicly traded corporations	View Verify

Watsco time-series forecasting models is one of many Watsco's stock analysis techniques aimed to predict future share value based on previously observed values. Time-series forecasting models ae widely used for non-stationary data. Non-stationary data are called the data whose statistical properties e.g. the mean and standard deviation are not constant over time but instead, these metrics vary over time. These non-stationary Watsco's historical data is usually called time-series. Some empirical experimentation suggests that the statistical forecasting models outperform the models based exclusively on fundamental analysis to predict the direction of the market movement and maximize returns from investment trading.

Watsco Stock media impact

Far too much social signal, news, headlines, and media speculation about Watsco that are available to investors today. That information is available publicly through Watsco media outlets and privately through word of mouth or via Watsco internal channels. However, regardless of the origin, that massive amount of Watsco data is challenging to quantify into actionable patterns, especially for investors that are not very sophisticated with ever-evolving tools and techniques used in the investment management field.

A primary focus of Watsco news analysis is to determine if its current price reflects all relevant headlines and social signals impacting the current market conditions. A news analyst typically looks at the history of Watsco relative headlines and hype rather than examining external drivers such as technical or fundamental data. It is believed that price action tends to repeat itself due to investors' collective, patterned thinking related to Watsco's headlines and news coverage data. This data is often completely overlooked or insufficiently analyzed for actionable insights to drive Watsco alpha.

Watsco Sentiment by Major News Outlets

Investor sentiment, mood or attitude towards Watsco can have a significant impact on its stock price or the market as a whole. This sentiment can be positive or negative, and various factors, such as economic indicators, news events, or market trends, can influence it. When investor sentiment is positive, investors are more likely to buy stocks, increasing demand and increasing the stock price. Positive investor sentiment can be driven by good news about the company or the broader market, such as solid earnings reports or positive economic data.

Note that negative investor sentiment can cause investors to sell stocks, leading to a decrease in demand and a drop in the stock price. Negative sentiment can be driven by factors such as poor earnings reports, negative news about the company or industry, or broader economic concerns. It's important to note that investor sentiment is just one of many factors that can affect stock prices. Other factors, such as company performance, industry trends, and global economic conditions, can also play a significant role in determining the value of a stock.

Watsco Inc Historical Investor Sentiment

Investor biases related to Watsco's public news can be used to forecast risks associated with an investment in Watsco. The trend in average sentiment can be used to explain how an investor holding Watsco can time the market purely based on public headlines and social activities around Watsco Inc. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.

Watsco's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Watsco and other traded tickers. The bigger the bubble, the more accurate the estimated score. Higher bars for a given day show more participation in the average Watsco news discussions. The higher the estimate score, the more favorable the investor's outlook on Watsco.

Watsco Corporate Directors

Aaron Nahmad	VP of Strategy and Innovation, Director of Global Bus. Devel., Director and Member of Nominating and Strategy Committee	Profile
Steven Rubin	Independent Director	Profile
J Custer	Independent Director	Profile
Denise Dickins	Lead Independent Director	Profile

Already Invested in Watsco Inc?

The danger of trading Watsco Inc is mainly related to its market volatility and Company specific events. As an investor, you must understand the concept of risk-adjusted return before you start trading. The most common way to measure the risk of Watsco is by using the Sharpe ratio. The ratio expresses how much excess return you acquire for the extra volatility you endure for holding a more risker asset than Watsco. The Sharpe ratio is calculated by using standard deviation and excess return to determine reward per unit of risk. To understand how volatile Watsco Inc is, you must compare it to a benchmark. Traditionally, the risk-free rate of return is the rate of return on the shortest-dated U.S. Treasury, such as a 3-year bond.

When determining whether Watsco Inc offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Watsco's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Watsco Inc Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Watsco Inc Stock: