MODEL VERDICT
Watsco, Inc. (WSO)
Relative Valuation•Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Popular:
Composite score derived from valuation, quality, and risk factors
Quantitative model thresholds · For educational and research purposes only
Each row records the model's monthly assessment. High Conviction = the model detected notable undervaluation vs peers. Neutral = no notable divergence was found. The return column shows the actual price change over 90 days for reference. This is a quantitative observation log — not investment advice.
| Date | Assessment | Score | Price | Status | 90d Fwd Return |
|---|---|---|---|---|---|
| May 1, 2026 | NEUTRAL | 0.26 | $428.57 | CURRENT | — |
| Apr 24, 2026 | NEUTRAL | 0.25 | $440.64 | CURRENT | — |
| Apr 17, 2026 | NEUTRAL | 0.26 | $430.26 | CURRENT | — |
| Apr 16, 2026 | NEUTRAL | 0.26 | $415.97 | CURRENT | — |
| Apr 10, 2026 | NEUTRAL | 0.26 | $409.09 | CURRENT | — |
Historical model observations for research purposes only. Past quantitative patterns do not predict future results. Not a recommendation to buy, sell, or hold any security.
| Methodology | Fair Value | vs Current | Weight | Quality | Status |
|---|---|---|---|---|---|
| Forward P/E 6 analyst estimates | $313.34 | -26.9% | 20% | A- | Analyst Est. |
| EV/EBITDA 6 industry peers | $298.55 | -30.3% | 20% | A- | Peer Data |
| Industry Median P/E 6 industry peers | $357.37 | -16.6% | 15% | A | Peer Data |
| Price / Free Cash Flow 6 industry peers | $354.23 | -17.3% | 15% | B+ | Peer Data |
| EV/EBIT 6 industry peers | $349.15 | -18.5% | 8% | B+ | Peer Data |
| EV/FCF 6 industry peers | $353.15 | -17.6% | 7% | B | Model Driven |
| Peg Ratio 5 industry peers | $340.77 | -20.5% | 5% | B | Data |
| EV To Revenue 6 industry peers | $408.05 | -4.8% | 4% | B | Data |
| Price / Sales 6 industry peers | $370.41 | -13.6% | 3% | B | Model Driven |
| Earnings Yield 6 industry peers | $358.93 | -16.2% | 2% | B | Data |
| FCF Yield 6 industry peers | $356.06 | -16.9% | 1% | B | Data |
| Weighted Output Blended model output | $335.76 | -21.6% | 100% | 97 | OVERVALUED |
| EPS Growth ↓ | P/E Multiple → | 29× | 32× | 35× (Current) | 38× | 41× |
|---|---|---|---|---|---|
| Bear Case (5%) | $372 | $411 | $449 | $487 | $526 |
| Conservative (8%) | $383 | $422 | $462 | $501 | $541 |
| Base Case (11.8%) | $397 | $438 | $479 | $520 | $562 |
| Bull Case (16%) | $412 | $454 | $497 | $540 | $582 |
Cross-sectional regression predicting expected multiples based on growth, margins, ROIC, and beta.
| Multiple | Avg | Median | Min | Max | Std |
|---|---|---|---|---|---|
| P/E Ratio | 28.53 | 29.02 | 16.18 | 35.63 | 6.15 |
| EV/EBIT | 18.43 | 18.17 | 11.30 | 23.56 | 3.80 |
| EV/EBITDA | 17.38 | 17.41 | 10.59 | 21.51 | 3.39 |
| P/FCF | 23.33 | 23.85 | 15.38 | 34.20 | 6.85 |
| P/FFO | 24.39 | 24.79 | 14.06 | 30.80 | 5.26 |
| P/TBV | 6.59 | 6.65 | 5.01 | 8.06 | 1.29 |
| P/AFFO | 25.91 | 26.29 | 14.90 | 32.50 | 5.54 |
| P/B Ratio | 4.77 | 4.47 | 3.64 | 5.98 | 0.98 |
| Div Yield | 0.03 | 0.03 | 0.02 | 0.04 | 0.01 |
| P/S Ratio | 1.73 | 1.76 | 1.22 | 2.33 | 0.41 |
Based on our peer multiples analysis with 28 valuation metrics, the model estimates WSO's fair value at $335.76 vs the current price of $428.57, implying -21.6% downside potential. Model verdict: Overvalued. Confidence: 97/100. This is a quantitative estimate, not a recommendation.
The blended fair value of $335.76 is calculated using four lenses: industry median multiples (40%), historical multiples (30%), forward estimates (20%), and quality-adjusted multiples (10%). Monte Carlo simulation (10,000 iterations) gives a range of $310.90 (P10) to $358.70 (P90), with a median of $334.73.
WSO's current P/E of 35.0x compares to the industry median of 29.2x (6 peers in the group). This represents a +19.9% premium to the industry. The historical average P/E is 28.5x over 7 years. Signal: Slight Premium.
26 analysts cover WSO with a consensus rating of Hold. The consensus price target is $399.80 (range: $349.00 — $485.00), implying -6.7% upside from the current price. Grade breakdown: Strong Buy (0), Buy (8), Hold (16), Sell (2), Strong Sell (0).
The model confidence score is 97/100, based on: data completeness (30), peer quality (25), historical depth (20), earnings stability (12), and model agreement (10). Cyclicality penalty: -0 points. The model shows strong agreement across inputs.
The model flags several key risks: (1) Multiple compression: WSO trades at the 6430th percentile of its historical P/E range. A reversion to median (28.5×) would imply significant downside. (2) Macro/regulatory risks are not captured in this model but remain material.
Peak earnings risk refers to the possibility that WSO's current profitability is above its sustainable long-term trend. The model detects a margin Z-score of +0.2σ, meaning margins are 0.2 standard deviations above their historical average. If margins revert to the 7-year mean (9.6%), the model estimates fair value drops by 1450.0% to approximately $491. This isn't a prediction — it's a scenario analysis.
No. This dashboard is a quantitative research tool for educational and informational purposes only. It is not investment advice, a solicitation, or a recommendation to buy, sell, or hold any security. The operator of this platform is not a registered investment advisor (RIA), broker-dealer, or financial planner. All model outputs, fair value estimates, signals, and scenarios are the result of automated quantitative computations and should not be construed as professional financial guidance. You should consult a qualified, licensed financial advisor before making any investment decisions. Past model performance is not indicative of future results.