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Watsco, Inc. (WSO)

Company Dividend Discount ModelIndustry: Industrial - DistributionSector: Industrials

Valuation Snapshot

Stable Growth$342.43 - $914.13$524.63
Multi-Stage$250.17 - $272.44$261.11
Blended Fair Value$392.87
Current Price$404.30
Upside-2.83%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS11.90%19.75%11.1910.118.787.787.026.385.534.343.372.60
YoY Growth--10.68%15.10%12.88%10.84%10.07%15.39%27.46%28.64%29.51%41.02%
Dividend Yield--2.20%2.33%2.76%2.55%2.69%4.04%3.81%2.40%2.35%1.93%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)549.75
(-) Cash Dividends Paid (M)461.12
(=) Cash Retained (M)88.63
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)109.9568.7241.23
Cash Retained (M)88.6388.6388.63
(-) Cash Required (M)-109.95-68.72-41.23
(=) Excess Retained (M)-21.3219.9147.39
(/) Shares Outstanding (M)37.8537.8537.85
(=) Excess Retained per Share-0.560.531.25
LTM Dividend per Share12.1812.1812.18
(+) Excess Retained per Share-0.560.531.25
(=) Adjusted Dividend11.6212.7113.44
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$342.43$524.63$914.13
Upside / Downside-15.30%29.76%126.10%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)549.75585.48623.53664.06707.23753.20775.79
Payout Ratio83.88%85.10%86.33%87.55%88.78%90.00%92.50%
Projected Dividends (M)461.12498.26538.28581.40627.85677.88717.61

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)452.50456.78461.07
Year 2 PV (M)443.94452.40460.93
Year 3 PV (M)435.46447.96460.70
Year 4 PV (M)427.06443.48460.37
Year 5 PV (M)418.74438.96459.96
PV of Terminal Value (M)7,290.777,642.928,008.54
Equity Value (M)9,468.469,882.5010,311.57
Shares Outstanding (M)37.8537.8537.85
Fair Value$250.17$261.11$272.44
Upside / Downside-38.12%-35.42%-32.61%

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