Watsco Hits 52-Week High - Analyst Blog


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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Zacks Investment Research

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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