Latest Ratios: P/E Ratio 26.6x · EV/EBITDA 18.3x · 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 | $13.4B | $12.8B | $17.8B | $15.7B | $8.9B | $11.1B | $8.0B | $6.2B | $5.2B | $6.3B | $5.3B |
| Enterprise Value | $13.4B | $12.8B | $17.7B | $15.9B | $9.1B | $11.4B | $8.0B | $6.6B | $5.3B | $6.3B | $5.4B |
| P/E Ratio → | 26.56 | 27.51 | 35.63 | 31.34 | 16.18 | 29.02 | 32.32 | 27.72 | 21.47 | 33.21 | 31.32 |
| P/S Ratio | 1.85 | 1.76 | 2.33 | 2.15 | 1.22 | 1.76 | 1.58 | 1.31 | 1.15 | 1.46 | 1.25 |
| P/B Ratio | 3.83 | 3.96 | 5.80 | 5.98 | 3.96 | 5.55 | 4.47 | 3.64 | 3.25 | 4.08 | 4.20 |
| P/FCF | 25.05 | 23.87 | 23.92 | 29.73 | 16.59 | 34.20 | 15.37 | 19.65 | 33.98 | 21.93 | 22.10 |
| P/OCF | 23.53 | 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 | 18.26 | 17.40 | 21.51 | 19.22 | 10.59 | 17.39 | 18.82 | 16.74 | 13.36 | 16.69 | 14.88 |
| EV / EBIT | 19.42 | 17.37 | 23.56 | 20.75 | 11.30 | 18.17 | 20.03 | 17.86 | 14.15 | 17.72 | 15.75 |
| EV / FCF | — | 23.95 | 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 | — | 0.09 | -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 | 3.8% | 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 | 3.8% | 3.6% | 2.8% | 3.2% | 6.2% | 3.4% | 3.1% | 3.6% | 4.7% | 3.0% | 3.2% |
| FCF Yield | 4.0% | 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 | 3.9% | 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 |
Includes 30+ ratios · 30 years · Updated daily
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Quick answers to the most common questions about buying WSO stock.
Watsco, Inc.'s current P/E ratio is 26.6x. The historical average is 24.2x. This places it at the 57th percentile of its historical range.
Watsco, Inc.'s current EV/EBITDA is 18.3x. 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 26.6x. This is at the 57th 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 3.84% 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.
Key Metrics
Top Statement Risk
Persistent revenue contraction
Metrics are mathematically derived from official filings.
Margin Resilience Amid Volume Decline
Gross margin held at 27.5% in Q2 2026 despite a 5% revenue drop, per recent financial statements, suggesting pricing power. Operating margin rebounded to 11.3% from 6.1% in Q4 2025, indicating cost discipline.
The stability of gross margin above 27% over the past year, even as revenue contracted, points to the company's ability to pass through manufacturer price increases to a fragmented contractor base. Operating margin recovery from the Q4 2025 trough of 6.1% to 11.3% in Q2 2026 reflects SG&A growing only 2.9% while revenue fell 5.0%, demonstrating variable cost flexibility. However, net margin at 7.8% remains below the 8.5% seen in Q2 2024, suggesting that while cost control is effective, top-line pressure is still limiting full earnings recovery.
Working Capital Swings Signal Seasonal Strain
Cash conversion cycle lengthened to 104 days in Q2 2026 from 97 days a year earlier, based on reported figures, driven by DIO rising to 108 days. DSO improved to 41 days, but inventory build remains a key cash drag.
The extension of DIO to 108 days in Q2 2026, up from 94 days in Q2 2024, suggests deliberate inventory accumulation ahead of the cooling season, but also raises the risk of obsolescence given the refrigerant transition. DPO compression to 45 days from 37 days in Q4 2025 indicates less supplier leverage, possibly due to payment terms or early payment discounts. The resulting CCC of 104 days, up from 97 days in Q2 2024, implies that working capital is absorbing more cash, which may pressure free cash flow in the near term.
Low Leverage Masks Seasonal Debt Spikes
Debt-to-equity remains low at 0.15 in Q2 2026, per financial statements, but D/EBITDA spiked to 4.48 in Q4 2025 before falling to 2.21. Interest coverage data is unavailable, limiting full assessment of debt service comfort.
The company's conservative capital structure is evident with D/E at 0.15, but the quarterly volatility in D/EBITDA—from 1.48 in Q2 2024 to 4.48 in Q4 2025—reflects seasonal borrowing for inventory and acquisitions. The absence of interest coverage data for most quarters prevents a precise evaluation of debt service capacity, though the low absolute debt levels suggest minimal risk. Investors should monitor whether the Q4 2025 spike indicates a new pattern of higher working capital needs or was a one-off event.
Liquidity Buffer Strong but Inventory-Heavy
Current ratio improved to 3.20 in Q2 2026 from 2.92 in Q2 2024, as reported in financial statements, but quick ratio of 1.45 reveals inventory dependence. Cash of $364M provides a cushion against seasonal swings.
The current ratio of 3.20 indicates ample short-term asset coverage, yet the quick ratio of 1.45 shows that a significant portion of current assets is tied up in inventory, which may be less liquid during a demand downturn. The company's cash position of $364M, combined with low debt, suggests it can weather a prolonged revenue contraction without liquidity stress. However, the seasonal pattern of negative free cash flow in Q1 and Q2 (e.g., -0.5% FCF margin in Q2 2026) highlights the need for this buffer to fund working capital needs.
Valuation Premium Reflects Defensive Model
Watsco trades at 25.5x P/E and 17.5x EV/EBITDA, per current multiples, versus Grainger's 36.7x and Fastenal's 46.5x P/E. Its 4.0% dividend yield is far above peers, suggesting income appeal.
Watsco's P/E of 25.5x is below Grainger and Fastenal, but its EV/EBITDA of 17.5x is in line with MSC Industrial, indicating the market prices its distribution model similarly to industrial parts suppliers. The 4.0% dividend yield, versus 0.7% for Grainger and 1.7% for Fastenal, reflects a shareholder return focus that may attract income investors. However, the PEG of 2.16 suggests that the market expects limited growth, which aligns with the recent revenue contraction and may imply that the premium is justified by defensive characteristics rather than growth.
P/E Misleads on Cyclical Earnings
The most misapplied ratio for Watsco is P/E, as LIFO accounting and JV noncontrolling interests distort reported earnings. According to recent SEC filings, adjusting for these items reveals higher economic earnings power.
Watsco's use of LIFO inventory accounting during inflationary periods suppresses reported earnings and margins, making the P/E appear higher than the economic reality. Additionally, the consolidated net income includes noncontrolling interests from JVs like Carrier, which do not accrue to WSO shareholders. Analysts should adjust net income for these items and use EV/EBITDA or P/FCF to better capture the company's true earning power. The P/FCF of 24.0x, while still elevated, may be more indicative of the cash-generative nature of the business than the P/E.