Watsco Inc. (NYSE:WSO) is likely to benefit from focus on strategic acquisitions, cost-cutting initiatives and growth potential in the replacement market.
United Rentals, Inc. (URI): Free Stock Analysis Report
Watsco, Inc. (WSO): Free Stock Analysis Report
Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report
EMCOR Group, Inc. (EME): Free Stock Analysis Report
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Zacks Investment Research
Currently, the distributor of heating, ventilation and air conditioning equipment as well as related parts and supplies (HVAC/R) carries a Zacks Rank #3 (Hold). Here's why investors should hold on to the stock at present.
Positive Estimate Revisions, Growth Projections
The Zacks Consensus for fiscal 2018 and fiscal 2019 has gone up 3% and 4%, respectively, over the past 60 days.
The Zacks Consensus Estimate for earnings for fiscal 2018 and fiscal 2019 reflects year-over-year growth of 24.3% and 10.2%, respectively.
Price Performance
The company outperformed the industry it belongs to in the past year. The stock has gained 22% while the industry grew 19%.
Value Growth Momentum (VGM) Score
The company currently has a VGM score of B. Here V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. The VGM Score of B along with some other key metrics makes the company a solid choice for investors.
Growth Drivers in Place
As the digital era progresses, speed, productivity and efficiency will be more critical to the success of a company. Consequently, it is investing to improve customer-experience. Watsco stated that e-commerce sales generated 25% of its total sales. During 2017, the company launched a variety of technologies and process enhancements to transform how HVAC contractor customers are served in the marketplace. Innovations to enhance the customer-experience include mobile apps, websites and e-commerce platforms that employ the industry’s leading, data-rich repository of product information.
Watsco has immense growth potential in the replacement market due to an aging stock of air conditioners and heating systems in the United States. The company is likely to benefit from the expansion of its product offerings, as well as logistical and productivity improvements. Over the long run, Watsco aims to slash infrastructure costs, which will provide the company with the opportunity to improve operating margins.
Bottom Line
Investors might want to hold on to the stock at present as it has ample positive prospects of outperforming peers in the near future.
Stocks to Consider
Some better-ranked stocks in the same sector are Boise Cascade Company (NYSE:BCC) , EMCOR Group, Inc. (NYSE:EME) and United Rentals, Inc. (NYSE:URI) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Boise Cascade has an expected long-term earnings growth rate of 7%. Its shares have gone up 55% in a year’s time.
EMCOR has an expected long-term earnings growth rate of 15%. Its shares have gone up 31% in a year’s time.
United Rentals has an expected long-term earnings growth rate of 19%. Its shares have appreciated 56% over the past year.
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United Rentals, Inc. (URI): Free Stock Analysis Report
Watsco, Inc. (WSO): Free Stock Analysis Report
Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report
EMCOR Group, Inc. (EME): Free Stock Analysis Report
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Zacks Investment Research
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