Latest Ratios: P/E Ratio 32.6x · EV/EBITDA 22.1x · ROE 15.8%. (1996–2025 historical series)
Price-based multiples — how expensive the stock is relative to earnings, sales, book value, and cash flow
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Market Cap | $16.2B | $12.8B | $17.8B | $15.7B | $8.9B | $11.1B | $8.0B | $6.2B | $5.2B | $6.3B | $5.3B |
| Enterprise Value | $16.3B | $12.8B | $17.7B | $15.9B | $9.1B | $11.4B | $8.0B | $6.6B | $5.3B | $6.3B | $5.4B |
| P/E Ratio → | 32.58 | 27.51 | 35.63 | 31.34 | 16.18 | 29.02 | 32.32 | 27.72 | 21.47 | 33.21 | 31.32 |
| P/S Ratio | 2.24 | 1.76 | 2.33 | 2.15 | 1.22 | 1.76 | 1.58 | 1.31 | 1.15 | 1.46 | 1.25 |
| P/B Ratio | 4.69 | 3.96 | 5.80 | 5.98 | 3.96 | 5.55 | 4.47 | 3.64 | 3.25 | 4.08 | 4.20 |
| P/FCF | 30.30 | 23.85 | 23.92 | 29.73 | 16.59 | 34.20 | 15.37 | 19.65 | 33.98 | 21.93 | 22.10 |
| P/OCF | 28.48 | 22.42 | 22.99 | 27.85 | 15.56 | 31.71 | 14.90 | 18.60 | 30.56 | 20.65 | 18.68 |
P/E links to full P/E history page with 30-year chart
Enterprise-value multiples — capital-structure-neutral measures of total business value
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| EV / Revenue | — | 1.77 | 2.32 | 2.19 | 1.26 | 1.82 | 1.59 | 1.37 | 1.16 | 1.44 | 1.29 |
| EV / EBITDA | 22.09 | 17.40 | 21.51 | 19.22 | 10.59 | 17.39 | 18.82 | 16.74 | 13.36 | 16.69 | 14.88 |
| EV / EBIT | 23.49 | 17.37 | 23.56 | 20.75 | 11.30 | 18.17 | 20.03 | 17.86 | 14.15 | 17.72 | 15.75 |
| EV / FCF | — | 23.93 | 23.82 | 30.29 | 17.05 | 35.23 | 15.51 | 20.61 | 34.32 | 21.73 | 22.85 |
Margins and return-on-capital ratios measuring operating efficiency
Full margin charts and quarterly trend are on the Earnings History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Margin | 28.0% | 28.0% | 26.8% | 27.4% | 27.9% | 26.6% | 24.2% | 24.3% | 24.6% | 24.5% | 24.5% |
| Operating Margin | 9.6% | 9.6% | 10.3% | 10.9% | 11.4% | 10.0% | 7.9% | 7.7% | 8.2% | 8.2% | 8.2% |
| Net Profit Margin | 6.9% | 6.9% | 7.0% | 7.4% | 8.3% | 6.7% | 5.3% | 5.2% | 5.3% | 4.8% | 4.3% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROE | 15.8% | 15.8% | 18.9% | 22.1% | 28.3% | 22.2% | 15.4% | 14.8% | 15.4% | 14.9% | 14.9% |
| ROA | 11.1% | 11.1% | 13.0% | 14.9% | 18.3% | 15.0% | 10.7% | 10.4% | 11.5% | 10.6% | 10.0% |
| ROIC | 16.6% | 16.6% | 19.9% | 22.1% | 25.9% | 22.5% | 15.5% | 15.0% | 17.7% | 18.2% | 18.2% |
| ROCE | 19.0% | 19.0% | 23.8% | 28.4% | 33.7% | 28.9% | 19.6% | 18.8% | 21.7% | 22.2% | 22.5% |
Solvency and debt-coverage ratios — lower is generally safer
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt / Equity | 0.15 | 0.15 | 0.15 | 0.19 | 0.17 | 0.23 | 0.12 | 0.22 | 0.08 | 0.01 | 0.19 |
| Debt / EBITDA | 0.65 | 0.65 | 0.54 | 0.61 | 0.45 | 0.69 | 0.51 | 0.97 | 0.35 | 0.06 | 0.64 |
| Net Debt / Equity | — | 0.01 | -0.03 | 0.11 | 0.11 | 0.17 | 0.04 | 0.18 | 0.03 | -0.04 | 0.14 |
| Net Debt / EBITDA | 0.06 | 0.06 | -0.10 | 0.36 | 0.28 | 0.51 | 0.16 | 0.78 | 0.13 | -0.15 | 0.49 |
| Debt / FCF | — | 0.08 | -0.11 | 0.56 | 0.45 | 1.04 | 0.14 | 0.97 | 0.35 | -0.20 | 0.76 |
| Interest Coverage | — | — | 36.00 | 156.23 | 373.63 | 631.05 | 323.68 | 90.99 | 135.80 | 55.61 | 93.09 |
Short-term solvency ratios and asset-utilisation metrics
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Current Ratio | 4.12 | 4.12 | 3.13 | 3.36 | 2.54 | 2.70 | 3.05 | 3.35 | 4.03 | 3.21 | 3.94 |
| Quick Ratio | 2.18 | 2.18 | 1.72 | 1.47 | 1.02 | 1.16 | 1.44 | 1.36 | 1.69 | 1.38 | 1.76 |
| Cash Ratio | 1.02 | 1.02 | 0.79 | 0.30 | 0.16 | 0.16 | 0.30 | 0.16 | 0.23 | 0.19 | 0.18 |
| Asset Turnover | — | 1.62 | 1.68 | 1.95 | 2.09 | 2.04 | 2.03 | 1.87 | 2.10 | 2.12 | 2.25 |
| Inventory Turnover | 3.76 | 3.76 | 4.02 | 3.93 | 3.83 | 4.14 | 4.90 | 3.92 | 4.09 | 4.30 | 4.65 |
| Days Sales Outstanding | — | 40.14 | 42.06 | 39.98 | 37.49 | 40.59 | 38.65 | 40.84 | 40.29 | 40.19 | 41.16 |
Earnings, FCF, buyback, and dividend yields — total returns to shareholders
Full dividend history and growth charts are on the Dividend History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dividend Yield | 3.1% | 3.7% | 2.4% | 2.4% | 3.7% | 2.7% | 3.3% | 3.9% | 4.0% | 2.6% | 2.4% |
| Payout Ratio | 95.3% | 95.3% | 79.0% | 71.3% | 55.3% | 70.3% | 98.6% | 98.2% | 86.1% | 78.8% | 69.8% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings Yield | 3.1% | 3.6% | 2.8% | 3.2% | 6.2% | 3.4% | 3.1% | 3.6% | 4.7% | 3.0% | 3.2% |
| FCF Yield | 3.3% | 4.2% | 4.2% | 3.4% | 6.0% | 2.9% | 6.5% | 5.1% | 2.9% | 4.6% | 4.5% |
| Buyback Yield | 0.0% | 0.0% | 0.2% | 0.0% | 1.0% | 0.0% | 0.0% | 0.0% | 0.1% | 0.1% | 0.1% |
| Total Shareholder Yield | 3.2% | 3.7% | 2.6% | 2.5% | 4.7% | 2.7% | 3.4% | 3.9% | 4.1% | 2.7% | 2.5% |
| Shares Outstanding | — | $38M | $38M | $37M | $36M | $35M | $35M | $35M | $37M | $37M | $36M |
Regulatory Refrigerant Transition Complexity
According to current market data, Watsco trades at a forward P/E of 32.41, a valuation that appears to price in the company's superior capital-light distribution model and historical dividend growth relative to industrial peers like MSC Industrial Direct, which trades at a significantly lower multiple.
The current valuation suggests investors are paying a premium for the perceived durability of Watsco's replacement-driven revenue stream. This multiple warrants caution, however, as it implies high expectations for future earnings growth that may be challenged by the current cyclical deceleration in the HVAC sector.
Based on reported financial statements, Watsco's ROIC has fluctuated between 2.0% and 6.4% over the last ten quarters, reflecting the inherent seasonality of the business rather than a fundamental decay in the company's ability to generate returns on its invested capital base.
While these figures appear modest compared to high-margin software peers, they are structurally constrained by the heavy inventory requirements of the HVAC distribution model. Investors should monitor whether management can improve these returns as the company integrates its recent acquisitions and optimizes its digital contractor platform.
As reported in quarterly filings, Watsco's cash conversion cycle has remained elevated, peaking at 136 days in 2025Q1, which highlights the company's reliance on significant inventory stockpiling to maintain its localized distribution monopoly in the Sunbelt region during peak cooling demand periods.
The high DIO (Days Inventory Outstanding) is a direct consequence of the company's strategy to ensure parts availability, which serves as a key competitive moat. However, this efficiency profile suggests that any prolonged demand downturn could lead to significant inventory bloat and associated carrying costs.
The most commonly misapplied metric for Watsco is the standard P/E ratio, which obscures the company's true economic durability by treating it as a cyclical housing stock rather than a software-enabled utility with a non-discretionary, recurring replacement annuity derived from its massive installed base.
Analysts should instead focus on the growth of the installed base and the company's ability to capture market share through its proprietary technology stack. Relying solely on cyclical multiples may lead to an undervaluation of the company's long-term competitive positioning during periods of temporary market normalization.
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Quick answers to the most common questions about buying WSO stock.
Watsco, Inc.'s current P/E ratio is 32.6x. The historical average is 24.2x. This places it at the 90th percentile of its historical range.
Watsco, Inc.'s current EV/EBITDA is 22.1x. This enterprise value multiple compares the company's total value (equity + debt - cash) to its EBITDA. The historical average is 12.9x.
Watsco, Inc.'s return on equity (ROE) is 15.8%. The historical average is 13.5%.
Based on historical data, Watsco, Inc. is trading at a P/E of 32.6x. This is at the 90th percentile of its historical P/E range. Compare with industry peers and growth rates for a complete picture.
Watsco, Inc.'s current dividend yield is 3.13% with a payout ratio of 95.3%.
Watsco, Inc. has 28.0% gross margin and 9.6% operating margin.
Watsco, Inc.'s Debt/EBITDA ratio is 0.7x, indicating low leverage. A ratio below 2x is generally considered financially healthy.