WSOWatsco, Inc.
Is the business good?
The checks split: earnings fully cash-backed (1.3×), but margins compressing.
Mixed fundamental signals. Nine pass/fail tests of year-over-year health from the filings.
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.
Against the whole market›
Percentile against every name Ryufin tracks. Higher is better; the tick marks the middle of the market. Context, not one of the checks above.
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?
Watsco, Inc. earns 20% 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% · 11 points above what the capital costs: growth creates value
- Operating margin
- 9.4%
Operating margin · Industrial Distribution median 8.3% · 12 months to Q2 2026
- Cash conversion
- 1.34×
Cash conversion · 0.70× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- +0.77%
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 Q2 2026
- 28%
- Operating margin12 months to Q2 2026
- 9.4%
- Net margin12 months to Q2 2026
- 6.5%
- Free cash flow margin
- 9.6%
- Revenue, trailing twelve months
- $7.28B
- Free cash flow, trailing twelve months
- $697M
- Net income, trailing twelve months
- $476M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 20%
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 #7 of 17 by RyuScore