Watsco Inc (WSO) Stock Analysis
Verdict: WATCH (do not buy)
High valuation and deteriorating growth make WSO a 'falling knife' until the 27x P/E multiple aligns with its flat-to-negative EPS trend.
Investment score: 44/100
Analysis as of
Is Watsco Inc stock worth reviewing? The TradeMates thesis
Watsco is experiencing a fundamental re-rating as the post-pandemic HVAC boom fades into a replacement-only market. With three misses in the last four quarters and EPS trending downward since 2022, the 'quality' premium is evaporating. The model sees better entry points near $250.
7-factor investment score
- Valuation: 35/100 (weight 20%)
- Financial Health: 85/100 (weight 15%)
- Technical Momentum: 20/100 (weight 15%)
- Earnings Quality: 30/100 (weight 15%)
- Insider Sentiment: 50/100 (weight 10%)
- Analyst Consensus: 55/100 (weight 10%)
- Risk-Adjusted Return: 40/100 (weight 15%)
Watsco Inc opportunities and risks
What speaks for WSO
- Sunbelt Market Expansion via M&A
What speaks against WSO
- Valuation Multiple Contraction
Peers and competitors
| Ticker | P/E | P/S | EV/EBITDA | Gross margin | Net margin | FCF yield |
|---|---|---|---|---|---|---|
| WSO | 27.3x | 1.8x | 17.6x | 27.9% | 6.5% | 5.5% |
| GWW | 36.7x | 3.5x | 23.1x | 39.2% | 9.7% | 2.1% |
| FAST | 40.3x | 6.2x | 28.7x | 44.7% | 15.5% | 1.9% |
| FERG | 21.3x | 1.4x | 14.7x | 30.7% | 6.6% | 2.3% |
| SUNB | 23.3x | 2.7x | 9.5x | 56.6% | 11.8% | 11.5% |
| WCC | 22.3x | 0.6x | 14.0x | 20.3% | 2.8% | 1.4% |
| Peer median | 23.3x | 2.7x | 14.7x | 39.2% | 9.7% | 2.1% |
Frequently asked questions about Watsco Inc (WSO)
Is WSO stock a good investment?
The TradeMates model rates Watsco Inc as WATCH (do not buy) with an investment score of 44/100. Watsco is experiencing a fundamental re-rating as the post-pandemic HVAC boom fades into a replacement-only market. With three misses in the last four quarters and EPS trending downward since 2022, the 'quality' premium is evaporating. The model sees better entry points near $250. This is algorithmic model output, not personal investment advice.
Is WSO stock a buy?
The TradeMates model verdict for WSO is WATCH (do not buy) with an investment score of 44/100. Treat this as a model signal to review, not a personal buy recommendation.