# Watsco (WSO.US)

Canonical: https://gigainvestors.com/s/WSO

Analysis as of: 2026-10-16T07:33:12.524Z. Financial observations: FY1996–FY2025.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $299.50 per share; close as of 2026-10-15.

## Checklist

### understandable: pass

- 1 revenue decline in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 1

- Years with a net loss: 0

- Operating margin variation: 0.14×

Chart: Operating margin; fiscal year observations.

- FY2016: 0.08×

- FY2017: 0.08×

- FY2018: 0.08×

- FY2019: 0.08×

- FY2020: 0.08×

- FY2021: 0.10×

- FY2022: 0.11×

- FY2023: 0.11×

- FY2024: 0.10×

- FY2025: 0.10×

### moat: pass

- ROIC, median of available years: 30.4%

- ROIC, second-lowest year: 26.7%

- Typical minus recent gross margin: -1.8 pp

- Typical gross margin (annual median): 25.6%

- Recent gross margin (lower of latest and 3-year median): 27.4%

- Years with nonpositive capital: 0

- Capital spending / revenue: 0.4%

- ROIC including acquisitions, ten-year median: 17.8%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 29.6%

- FY2017: 30.6%

- FY2018: 30.2%

- FY2019: 22.5%

- FY2020: 28.3%

- FY2021: 33.7%

- FY2022: 41.5%

- FY2023: 32.4%

- FY2024: 33.1%

- FY2025: 26.7%

### economics: pass

- Owner earnings / net income, 5-yr: 1.01×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $2.6B

- Net income, five-year total: $2.6B

- Return on incremental invested capital: 38.8%

- Working capital / revenue, annual change: 0.1 pp

- Working capital / revenue, change between three-year averages: 0.5 pp

- Working capital / revenue, final three-year average: 24.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.01×

- FY2022: 1.00×

- FY2023: 1.00×

- FY2024: 1.02×

- FY2025: 1.02×

### management: fail

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 30.2% vs 32.4%

- Per-share earnings: 5.60 to 14.30 (three-year endpoint medians)

- five-year and ten-year diluted share growth both above threshold

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 1.6%

- Ordinary dilution, 5-year annual growth: 1.5%

- Market cap gain: $7.9B

- Cumulative retained earnings: $769M

- Diluted shares, 10-year annual growth: 1.6%

- Diluted shares, 5-year annual growth: 1.5%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 12.4%

- Per-share value change: $8.69

- Per-share value, starting three-year median: $5.60

- Per-share value, ending three-year median: $14.30

- Buybacks concentrated in cheaper years (correlation): 0.09

- Average buyback yield: 0.1%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $228M

- Cumulative net income, 10 years: $3.7B

- ROIC, first three-year median: 30.2%

- ROIC, last three-year median: 32.4%

Chart: Earnings per share; fiscal year observations.

- FY2016: $5.60

- FY2017: $6.34

- FY2018: $7.07

- FY2019: $7.09

- FY2020: $7.67

- FY2021: $11.83

- FY2022: $15.51

- FY2023: $14.68

- FY2024: $14.30

- FY2025: $13.11

### accounting: pass

- Sloan accruals: -1.6%

- Receivables to sales index (DSRI): 0.95×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 6.2%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.15×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.24×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -5.1%

- FY2017: -4.6%

- FY2018: 3.3%

- FY2019: -3.5%

- FY2020: -10.6%

- FY2021: 2.2%

- FY2022: 0.8%

- FY2023: -0.7%

- FY2024: -5.2%

- FY2025: -1.6%

## Holders

- [Francois Rochon](https://gigainvestors.com/GC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Thomas Gayner](https://gigainvestors.com/MKL): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 46% since Nov 2024 · "Watsco (WSO) Reported Softer Earnings, Is The Pullback A Valuation Gap?" (finance.yahoo.com, Aug 2026) · sales -5%

Story as of 2026-10-16T09:59:53.208Z; price observation 2026-10-15.

- 2025-04-24: Watsco (NYSE:WSO) Reports Lower Q1 Earnings With Sales Of US$1,531 Million ([finance.yahoo.com](https://finance.yahoo.com/news/watsco-nyse-wso-reports-lower-181430964.html))

- 2025-07-30: WATSCO INC (NYSE:WSO) Reports Q2 2025 Earnings Miss, Highlights Margin Expansion Amid Revenue Shortfall ([chartmill.com](https://www.chartmill.com/news/WSO/Chartmill-31897-WATSCO-INC-NYSEWSO-Reports-Q2-2025-Earnings-Miss-Highlights-Margin-Expansion-Amid-Revenue-Shortfall))

### Sales · FY2024–2025

sales -5%; source https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm; observed 2026-02-27.

- FY2016: $4.2B 

- FY2017: $4.3B 

- FY2018: $4.5B 

- FY2019: $4.8B 

- FY2020: $5.1B 

- FY2021: $6.3B 

- FY2022: $7.3B 

- FY2023: $7.3B 

- FY2024: $7.6B 

- FY2025: $7.2B 

### Gross margin · FY2025

gross margin 28%; source https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm; observed 2026-02-27.

- FY2016: 24.5% 

- FY2017: 24.5% 

- FY2018: 24.6% 

- FY2019: 24.3% 

- FY2020: 24.2% 

- FY2021: 26.6% 

- FY2022: 27.9% 

- FY2023: 27.4% 

- FY2024: 26.8% 

- FY2025: 28.0% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in industrial distribution; annual sales are USD 7.2 billion.

- Source: https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm (filed 2026-02-27); FY2025: revenue 7239290000; grossProfit 2030464000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); WSO.US: Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, and refrigeration equipment, and related parts and supplies in the United States, Canada, Latin America, and the Caribbean. It 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. The company 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. 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. Watsco, Inc. was incorporated in 1956 and is headquartered in Miami, Florida.

### Why customers stay

Margins ranged from 26.8% to 28% during 2023–25; it earns 30.4% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2023: grossProfit / revenue = 27.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2024: grossProfit / revenue = 26.8%.

- Source: https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm (filed 2026-02-27); FY2025: grossProfit / revenue = 28%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); 10-year return on capital observations [[2016,0.2959905716848946],[2017,0.3056984942477841],[2018,0.30182677965521754],[2019,0.2248773148474505],[2020,0.2833023573680891],[2021,0.3369772002753767],[2022,0.4146412644085373],[2023,0.3243358122840965],[2024,0.3310126972816173],[2025,0.2672332565064316]]; median 0.30376263695150085. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 28% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm (filed 2026-02-27); Gross margin observations: [[2021,0.2655245253648296],[2022,0.2791026929713525],[2023,0.27350408106135193]]; range within 2 percentage points.

### Where the cash goes

Reinvests 3.8% of cash earnings; earns 38.8% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2016: growth capex 1609036.8226166144; upkeep 41967963.177383386; owner earnings 165843108.78979647. Growth capex / owner earnings = 0.009702162690739494.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2017: growth capex 0; upkeep 17876000; owner earnings 211585198.75238058. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2018: growth capex 0; upkeep 17153000; cash acquisitions 5626000; owner earnings 246980743.77885467. Growth capex plus acquisitions / owner earnings = 0.022779103803483126.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2019: growth capex 0; upkeep 16425000; cash acquisitions 59672000; owner earnings 252674698.33488294. Growth capex plus acquisitions / owner earnings = 0.2361613584313598.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2020: growth capex 0; upkeep 16342000; cash acquisitions 0; owner earnings 277558629.15722895. Growth capex plus acquisitions / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2021: growth capex 0; upkeep 24108000; cash acquisitions 129462000; owner earnings 422321021.2437467. Growth capex plus acquisitions / owner earnings = 0.3065487946082602.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2022: growth capex 2106000; upkeep 31683000; cash acquisitions 47000; owner earnings 601167000. Growth capex plus acquisitions / owner earnings = 0.0035813675734030644.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2023: growth capex 388000; upkeep 35090000; cash acquisitions 3822000; owner earnings 536337000. Growth capex plus acquisitions / owner earnings = 0.007849542358628996.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); FY2024: growth capex 0; upkeep 30090000; cash acquisitions 5173000; owner earnings 545339105.5966276. Growth capex plus acquisitions / owner earnings = 0.009485840914233512.

- Source: https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm (filed 2026-02-27); FY2025: growth capex 0; upkeep 34550000; cash acquisitions 19198000; owner earnings 504777240.6175756. Growth capex plus acquisitions / owner earnings = 0.03803261806438021.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); Incremental return on capital 0.38834473573079176, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); Dividend observations: [[2016,127604000],[2017,164147000],[2018,209218000],[2019,241412000],[2020,265713000],[2021,294522000],[2022,332447000],[2023,382646000],[2024,423521000],[2025,473765000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm (filed 2026-02-27); FY2025: cash repurchases 3657000 USD.

### Are managers owners

Insiders own 0.4% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); WSO.US SharesStats.PercentInsiders = 0.437 percentage points; cache date 2026-10-16.

### What could break it

US import tariffs could raise product costs.

- Source: https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm (filed 2026-02-27); from one or more of these manufacturers or a decline in market acceptance of these manufacturers’ products, including new HVAC systems that use refrigerants with a lower GWP, could have a material adverse effect on our results of operations, cash flows, and liquidity.

Many HVAC equipment and component manufacturers, including Carrier and Rheem, source component parts from China and Mexico and/or assemble a significant number of products for residential and light-commercial applications in Mexico. If any restrictions, including as a result of overall trade relations or a potential increase in tariffs (which the Trump administration has proposed), are imposed related to such products sourced from, or assembled in, Mexico and China, including as a result of amendments to existing trade agreements, and our product costs consequently increase, we would be required to raise our prices, which may result in cost inflation, the loss of customers, and harm to our business.

We maintain trade name and distribution agreements with Carrier, Rheem, and Mitsubishi that provide us with distribution rights on an exclusive basis in specified territories. Such agreements are not subject to a stated term or expiration date. We also maintain distribution agreements with various other suppliers, either on an exclusive or non-exclusive basis, for various terms ranging from one to ten years. Certain distribution agreements for particular branded products contain provisions that restrict or limit the sale of competitive products in the locations that sell such branded products. Other than where such location-level restrictions apply, we may distribute other manufacturers’ lines of air conditioning or heating equipment in other locations in the same territories.

Risks Inherent in Acquisitions

As part of our strategy, we intend to pursue additional acquisitions of complementary businesses, including through joint ventures and investments in unconsolidated entities. If we complete future acquisitions, including investments in unconsolidated entities, or enter into new joint ventures, we may be required to incur or assume additional debt and/or issue additional shares of our common stock as consideration, which will dilute our existing shareholders’ ownership interest and may affect our results of operations. Growth through acquisitions involves a number of risks, including, but not limited to, the following:

•

the ability to identify and consummate transactions with complementary acquisition candidates;

•

the successful operation and/or integration of acquired companies;

•

the retention of existing customers purchasing from acquired companies;

•

the efficiency and effectiveness of an acquired company’s internal control environment;

•

diversion of management’s attention from other daily functions;

•

issuance by us of equity securities that dilute the ownership o

### What the price says

The price is 1.6 times annual sales.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-27); Closing price 299.5 USD; reporting-to-trading FX 1; FY2025 annual sales per share 191.01100085886864; price multiple 1.5679725180922437. FY2025 cash earnings/share 13.318710252129845. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $137.29 per share

- 2016-11: $149.00 per share

- 2016-12: $148.12 per share

- 2017-01: $152.74 per share

- 2017-02: $148.27 per share

- 2017-03: $143.18 per share

- 2017-04: $138.80 per share

- 2017-05: $141.12 per share

- 2017-06: $154.20 per share

- 2017-07: $150.77 per share

- 2017-08: $147.36 per share

- 2017-09: $161.07 per share

- 2017-10: $166.57 per share

- 2017-11: $167.50 per share

- 2017-12: $170.04 per share

- 2018-01: $179.79 per share

- 2018-02: $165.37 per share

- 2018-03: $180.97 per share

- 2018-04: $167.42 per share

- 2018-05: $184.02 per share

- 2018-06: $178.28 per share

- 2018-07: $172.51 per share

- 2018-08: $174.99 per share

- 2018-09: $178.10 per share

- 2018-10: $148.18 per share

- 2018-11: $153.70 per share

- 2018-12: $139.14 per share

- 2019-01: $147.48 per share

- 2019-02: $143.89 per share

- 2019-03: $143.21 per share

- 2019-04: $158.47 per share

- 2019-05: $157.39 per share

- 2019-06: $163.53 per share

- 2019-07: $162.62 per share

- 2019-08: $163.55 per share

- 2019-09: $169.18 per share

- 2019-10: $176.30 per share

- 2019-11: $177.97 per share

- 2019-12: $180.15 per share

- 2020-01: $173.92 per share

- 2020-02: $156.98 per share

- 2020-03: $158.03 per share

- 2020-04: $160.99 per share

- 2020-05: $177.91 per share

- 2020-06: $177.70 per share

- 2020-07: $236.07 per share

- 2020-08: $244.99 per share

- 2020-09: $232.89 per share

- 2020-10: $224.14 per share

- 2020-11: $227.36 per share

- 2020-12: $226.55 per share

- 2021-01: $238.49 per share

- 2021-02: $243.10 per share

- 2021-03: $260.75 per share

- 2021-04: $292.86 per share

- 2021-05: $291.40 per share

- 2021-06: $286.64 per share

- 2021-07: $282.44 per share

- 2021-08: $278.42 per share

- 2021-09: $264.62 per share

- 2021-10: $289.58 per share

- 2021-11: $292.71 per share

- 2021-12: $312.88 per share

- 2022-01: $282.56 per share

- 2022-02: $273.06 per share

- 2022-03: $304.64 per share

- 2022-04: $266.78 per share

- 2022-05: $255.63 per share

- 2022-06: $238.82 per share

- 2022-07: $273.95 per share

- 2022-08: $272.03 per share

- 2022-09: $257.46 per share

- 2022-10: $270.96 per share

- 2022-11: $268.98 per share

- 2022-12: $249.40 per share

- 2023-01: $287.37 per share

- 2023-02: $304.71 per share

- 2023-03: $318.16 per share

- 2023-04: $346.38 per share

- 2023-05: $324.37 per share

- 2023-06: $381.47 per share

- 2023-07: $378.19 per share

- 2023-08: $364.55 per share

- 2023-09: $377.72 per share

- 2023-10: $348.89 per share

- 2023-11: $382.23 per share

- 2023-12: $428.47 per share

- 2024-01: $390.98 per share

- 2024-02: $394.12 per share

- 2024-03: $431.97 per share

- 2024-04: $447.72 per share

- 2024-05: $474.90 per share

- 2024-06: $463.24 per share

- 2024-07: $489.49 per share

- 2024-08: $475.42 per share

- 2024-09: $491.88 per share

- 2024-10: $473.01 per share

- 2024-11: $551.60 per share

- 2024-12: $473.89 per share

- 2025-01: $478.59 per share

- 2025-02: $504.33 per share

- 2025-03: $508.30 per share

- 2025-04: $459.84 per share

- 2025-05: $443.57 per share

- 2025-06: $441.62 per share

- 2025-07: $450.88 per share

- 2025-08: $402.38 per share

- 2025-09: $404.30 per share

- 2025-10: $368.01 per share

- 2025-11: $346.40 per share

- 2025-12: $336.95 per share

- 2026-01: $386.45 per share

- 2026-02: $417.33 per share

- 2026-03: $363.79 per share

- 2026-04: $437.84 per share

- 2026-05: $367.10 per share

- 2026-06: $416.73 per share

- 2026-07: $309.30 per share

- 2026-08: $309.82 per share

- 2026-09: $302.69 per share

- 2026-10: $279.90 per share

## Annual estimated value (USD per share)

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/105016/000119312526082486/wso-20251231.htm); period 2025-12-31, filed 2026-02-27.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.