Stock fact sheet · data as of
Watsco, Inc. (WSO): fair value, margin of safety and Wheel Score
Industrials · Industrial - Distribution · United States · High Yield Income
Is WSO undervalued?
At 295.09 (close of 16 Oct 2026), WSO trades 17% over the GLS average fair value of 251.91. 3 of the 9 models land above the price and 6 below. A negative margin of safety costs Value points in the Wheel Score (5 of 25 here) - the models see no discount, which does not make the business a poor one, only the price a full one.
There is a wide gap between GLS Growth (39.44) and Graham Growth (545.36). When the models are this far apart the "fair value" is really a range, and the margin of safety above should be read with that range in mind.
The nightly engine files WSO under High Yield Income: a dividend yield above 4%.
Nine valuation models for WSO
Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.
| Model | Value | vs price | What it measures |
|---|---|---|---|
| DCF | 192.58 | -35% | Present value of the projected free cash flows, discounted at the cost of capital |
| Graham Number | 148.68 | -50% | The most a defensive investor pays for the earnings and book value per share |
| Graham Growth | 545.36 | +85% | Graham's growth formula: EPS × (8.5 + 2 × growth), adjusted for bond yields |
| Lynch | 225.78 | -23% | EPS × the earnings growth rate (PEG of 1), growth capped at 25% |
| GLS Growth | 39.44 | -87% | EPS compounded ten years at the blended growth rate, discounted back at 15% a year |
| 10 Cap | 436.30 | +48% | Owner's earnings (operating cash flow less maintenance capex) capitalised at 10% |
| Payback Time | 354.88 | +20% | Eight years of compounded free cash flow: the price at which the business pays for itself |
| DDM | 185.40 | -37% | Dividend discount model: next year's dividend ÷ (10% − 3% growth); needs a dividend |
| EPV | 138.81 | -53% | Earnings power value: current EPS capitalised at 9% with no growth |
| Zombie (liquidation) | 41.72 | -86% | Current assets less all liabilities, per share: the balance-sheet floor. Not in the average |
| Wall St target | 386.25 | +31% | Analysts' average 12-month price target. Not in the average |
Quality and financial health
Watsco, Inc. scores 5 of 9 on the Piotroski F-score: a middling result that falls one point short of the Sunday Scan's "6 or more" rule. Some of the nine tests on profitability, leverage and efficiency are failed, so the accounts are worth a look before selling a put on the name. On durability WSO scores 5.2/10 on the GLS Moat - a middle reading; the Scorecard on the Quote page's Financials tab shows which ten-year lines are steady and which are not.
Returns on capital are high - ROIC 15.2%, ROE 17.9%, ROA 11.2% - with debt at 0.17 times equity and a free-cash-flow yield of 5.7%.
The dividend yield is high at 4.27% (payout ratio 105%) - a payout above 100% of earnings, which is not covered by profits. A yield this size is often the market's way of pricing a risk to the payout, so the health score and cash flow matter more than usual.
Institutional ownership scores 10/10, insider activity 10/10 and Congressional trading 5/10 on the GLS smart-money scales.
| Piotroski F-score | 5 / 9 | ROIC | 15.2% |
|---|---|---|---|
| GLS Moat | 5.2 / 10 | ROE | 17.9% |
| Debt / equity | 0.17 | ROA | 11.2% |
| Free-cash-flow yield | 5.7% | Payout ratio | 105% |
| Institutions | 10 / 10 | Insiders · Congress | 10 · 5 / 10 |
Wheel Score 62: Fair
A Wheel Score of 62 puts Watsco, Inc. in the Fair band - below the 70 the Sunday Scan requires. Value 5/25, Health 11/20, Moat 8/15, Premium 20/20 and Stability 18/20; the weakest part is Value (5/25).
Implied volatility is 41% on the near-the-money contracts 20-60 days out - inside the 35-60% range the Wheel Score pays full marks for: enough premium to be worth selling, not so much that the risk is unpaid. Chain open interest is 4,562 contracts across all expiries - enough for the wheel at normal size.
Volume runs at 844k shares a day on a market cap of $12.2B, with a beta of 1.04; the Stability part of the Wheel Score gives that 18 of 20.
| Part | Points | From | |
|---|---|---|---|
| Value | 5 / 25 | -17% margin of safety | |
| Health | 11 / 20 | Piotroski 5/9 | |
| Moat | 8 / 15 | moat 5.2/10 | |
| Premium | 20 / 20 | implied volatility 41% | |
| Stability | 18 / 20 | 844k shares/day, $12.2B cap, beta 1.04 |
The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.
Upcoming events
Watsco, Inc. reports earnings on 27 Oct 2026 (before the open) - inside the 14-day window the Sunday Scan avoids, because a put sold now would carry the report's gap risk. The shares go ex-dividend on 16 Oct 2026 (3.30 per share), so a covered call sold before then carries a small early-assignment risk around that date.
Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.
Similar stocks in Industrial - Distribution
The 12 companies below are the closest to Watsco, Inc. by market cap within the Industrial - Distribution industry, each with its own fact sheet; the Compare page puts up to eight of them side by side.
| Stock | Close | Fair value | MoS | Wheel | Mkt cap |
|---|---|---|---|---|---|
| AIT Applied Industrial Technologies, Inc. | 333.83 | 176.96 | -89% | 62Fair | $12.3B |
| QXO QXO, Inc. | 10.33 | 23.54 | +56% | 45Weak | $10.7B |
| WCC WESCO International, Inc. | 351.49 | 278.53 | -26% | 62Fair | $17.1B |
| CNM Core & Main, Inc. | 41.79 | 46.97 | +11% | 80Prime | $7.7B |
| MSM MSC Industrial Direct Co., Inc. | 130.70 | 62.37 | -110% | 59Fair | $7.3B |
| POOL Pool Corporation | 158.12 | 181.01 | +13% | 75Good | $5.7B |
| XMTR Xometry, Inc. | 95.15 | - | - | 45Weak | $5.3B |
| SITE SiteOne Landscape Supply, Inc. | 89.36 | 90.59 | +1% | 72Good | $3.9B |
| FERG Ferguson plc | 228.76 | 111.72 | -105% | 55Fair | $44.3B |
| DXPE DXP Enterprises, Inc. | 177.73 | 199.81 | +11% | 73Good | $2.8B |
| DNOW Dnow Inc. | 15.02 | 13.01 | -15% | 45Weak | $2.7B |
| FAST Fastenal Company | 50.38 | 18.53 | -172% | 58Fair | $57.8B |
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Start free See the Sunday ScanQuestions about WSO
Is WSO undervalued right now?
No: at 295.09 the stock trades 17% above the GLS average fair value of 251.91 (data as of 16 Oct 2026). The margin of safety is negative.
What is the Wheel Score of WSO and what does it mean?
WSO scores 62 out of 100 (Fair). The Wheel Score blends the margin of safety (25 points), Piotroski health (20), the GLS moat (15), the option premium on offer (20) and trading stability (20) into one number that ranks stocks for the wheel strategy - selling cash-secured puts, then covered calls if assigned. 80 and above is Prime, 65-79 Good, 50-64 Fair, under 50 Weak.
What is the GLS fair value for WSO?
251.91 per share as of 16 Oct 2026 - the simple average of the 9 valuation models (out of nine: DCF, Graham Number, Graham Growth, Lynch, GLS Growth, 10 Cap, Payback Time, DDM and EPV) that produced a positive value. The models run every night on the latest filings; the Quote page lets you switch any of them off and add a margin of safety of your own.
When does Watsco, Inc. report earnings next?
The next earnings report is due on 27 Oct 2026 (before the open), 11 days from the data date of 16 Oct 2026. The Calendars page lists every upcoming report with its time of day.
Does WSO have listed options, and how liquid are they?
Yes. The nightly snapshot found 372 listed contracts with 4,562 open interest across all expiries and implied volatility of 41% on the near-the-money contracts. The Options scanner lists the cash-secured put and covered call set-ups with premium and annualised yield worked out.