WSO-BWatsco, Inc.
Is the business good?
The checks split: earnings fully cash-backed (1.3×), but margins compressing.
Operating profit is fully backed by cash. Conversion is improving vs a year ago.
Operating margin has narrowed over the past few years, profitability per dollar of sales is eroding.
A balanced mix of margins, efficiency, and leverage. ROE 18% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is WSO-B?
Watsco, Inc. earns 21% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
Return on invested capital · cost of capital 9.0% · 12 points above what the capital costs: growth creates value
- Operating margin
- 9.9%
Operating margin · Industrial Distribution median 8.3% · 12 months to Q1 2026
- Cash conversion
- 1.27×
Cash conversion · 0.81× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- +0.29%
Share count, year on year · flat: no meaningful dilution
| Year | Operating margin |
|---|---|
| FY2020 | 7.9% |
| FY2021 | 10% |
| FY2022 | 11% |
| FY2023 | 11% |
| FY2024 | 10% |
| FY2025 | 10.0% |
Details›
- Gross margin12 months to Q1 2026
- 28%
- Operating margin12 months to Q1 2026
- 9.9%
- Net margin12 months to Q1 2026
- 6.9%
- Free cash flow margin
- 9.6%
- Revenue, trailing twelve months
- $7.24B
- Free cash flow, trailing twelve months
- $694M
- Net income, trailing twelve months
- $496M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 21%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Industrial Distribution
Ranks #4 of 17 by RyuScore