Watsco Hits 52-Week High - Analyst Blog

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Watsco Inc. 's ( WSO ) 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 4.21%.

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. ( UTX ), 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. ( LII ) and Avnet, Inc. ( AVT ), both carrying a Zacks Rank #2 (Buy).



AVNET (AVT): Free Stock Analysis Report

LENNOX INTL INC (LII): Free Stock Analysis Report

UTD TECHS CORP (UTX): Free Stock Analysis Report

WATSCO INC (WSO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AVT , LII , UTX , WSO

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