) shares attained a 52-week high of $99.59 during intraday
trading on Feb 28, finally closing lower at $98.38.
The company has delivered a year-to-date return of about 28.4%,
outperforming the S&P return of 25.4%. Watsco has a market
cap of $3.2 billion. Average volume of shares traded over the
last 3 months was approximately 385K. The company has long-term
estimated earnings per share growth rate of 16.5%.
What's Driving Watsco?
Watsco's shares have gained since it reported record
fourth-quarter and fiscal 2013 results on Feb 13. Adjusted
earnings came in at 50 cents per share, up 22% from 41 cents
earned in the year-ago quarter. The earnings also beat the Zacks
Consensus Estimate by a penny.
Growth was aided by higher sales, stronger selling margins and
continued operating cost management. Including one-time items,
earnings per share in the quarter were 50 cents compared with 4
cents in the year-ago quarter. The company has delivered positive
earnings surprises in three of the last four quarters, averaging
Watsco reported record earnings per share of $3.68, up 36% year
over year from adjusted earnings per share of $3.03, beating the
Zacks Consensus Estimate by a penny.
Watsco has immense potential in the replacement market given the
aging stock of air conditioners and heating systems in the U.S.
Furthermore, Watsco's joint venture with Carrier Corporation, a
wholly owned subsidiary of
United Technologies Corp.
), continues to generate profits. The company intends to purchase
an additional 10% interest in the venture in the Sun Belt region
in 2014. This is likely to be accretive to earnings.
Watsco intends to improve revenues to above $10 billion and
margins above 10% through new product offerings, geographic
expansion along with logistical and productivity improvements.
Other Stocks to Consider
Watsco currently holds a Zacks Rank #3 (Hold). Some better-ranked
stocks in the same sector include
Lennox International, Inc.
), both carrying a Zacks Rank #2 (Buy).
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LENNOX INTL INC (LII): Free Stock Analysis
UTD TECHS CORP (UTX): Free Stock Analysis
WATSCO INC (WSO): Free Stock Analysis Report
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