Watsco, Inc. shares are closing in on important technical levels. The technical chart pattern suggests that the currently tested resistance will be broken and new upside potential arises while volatility is likely to increase. Investors could get ahead of this signal in order to benefit from a better risk/reward ratio.
Summary
● The company has strong fundamentals. More than 70% of companies have a lower mix of growth, profitability, debt and visibility.
● Overall, and from a short-term perspective, the company presents an interesting fundamental situation.
● According to Refinitiv, the company's ESG score for its industry is poor.
Strengths
● Over the last twelve months, the sales forecast has been frequently revised upwards.
● Analysts have consistently raised their revenue expectations for the company, which provides good prospects for the current and next years in terms of revenue growth.
● For the last twelve months, analysts have been gradually revising upwards their EPS forecast for the upcoming fiscal year.
● For the last few months, EPS revisions have remained quite promising. Analysts now anticipate higher profitability levels than before.
● Considering the small differences between the analysts' various estimates, the group's business visibility is good.
Weaknesses
● The company's profitability before interest, taxes, depreciation and amortization characterizes fragile margins.
● With a 2021 P/E ratio at 28.52 times the estimated earnings, the company operates at rather significant levels of earnings multiples.
● The company appears highly valued given the size of its balance sheet.
Watsco, Inc. is engaged in the distribution of air conditioning, heating and refrigeration equipment and related parts and supplies (HVAC/R) with locations in the United States, Canada, Mexico, and Puerto Rico, and on an export basis to Latin America and the Caribbean. The Company sells products to the commercial refrigeration market, which include condensing units, compressors, evaporators, valves, refrigerants, walk-in coolers, and ice machines for industrial and commercial applications. It also sells a variety of non-equipment products including parts, ductwork, air movement products, insulation, tools, installation supplies, thermostats, and air quality products. It distributes products manufactured by Flexible Technologies, Inc. (Flexible Technologies), Resideo Technologies, Inc. (Resideo), Copeland Corporation, LLC, The Chemours Company (Chemours), Mueller Industries, Inc. (Mueller), and Welbilt, Inc. (Welbilt), among others. The Company operates in approximately 692 locations.
WATSCO, INC. 
