Watsco Inc (WSO)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 27.35% | 27.91% | 26.55% | 24.19% | 24.25% |
| Operating profit margin | 10.91% | 11.43% | 10.01% | 7.93% | 7.69% |
| Pretax margin | 9.50% | 9.99% | 8.72% | 6.85% | 6.56% |
| Net profit margin | 7.36% | 8.26% | 6.67% | 5.33% | 5.16% |
Watsco Inc.'s profitability ratios demonstrate a consistent improvement over the past five years. The gross profit margin has remained relatively stable, ranging from 24.19% in 2020 to 27.91% in 2022, indicating strong control over the cost of goods sold.
The operating profit margin has shown a steady increase from 7.48% in 2019 to 11.12% in 2022, reflecting the company's efficient management of operating expenses. This trend suggests that Watsco has been successful in generating profits from its core operations.
Similarly, the pretax margin has also displayed a positive trajectory, reaching 11.40% in 2022 from 7.61% in 2019. This indicates that the company has been able to effectively manage its pre-tax income relative to its total revenue over the years.
The net profit margin, a key indicator of overall profitability, has shown consistent improvement, increasing from 4.73% in 2019 to 7.56% in 2022. This reveals the company's ability to generate higher profits after accounting for all expenses, including taxes.
Overall, the trend in Watsco Inc.'s profitability ratios suggests a commendable performance in terms of managing costs, operations, and overall profitability over the analyzed period. Their ability to enhance profit margins reflects efficient operations and strategic decision-making.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 21.31% | 23.84% | 20.37% | 16.14% | 14.35% |
| Return on assets (ROA) | 14.38% | 17.23% | 13.58% | 10.85% | 9.62% |
| Return on total capital | 35.40% | 44.02% | 35.84% | 26.98% | 23.03% |
| Return on equity (ROE) | 24.05% | 31.82% | 25.16% | 18.13% | 17.13% |
Watsco Inc. has shown a positive trend in its profitability ratios over the past five years.
1. Operating return on assets (Operating ROA) has exhibited a consistent improvement from 13.95% in 2019 to 20.61% in 2023, demonstrating that the company is becoming more efficient in generating operating income from its assets.
2. Return on assets (ROA) has also increased steadily from 8.82% in 2019 to 13.39% in 2023, indicating that the company is generating higher net income relative to its total assets.
3. Return on total capital has shown a significant upward trend from 22.07% in 2019 to 33.71% in 2023, reflecting Watsco's ability to deliver higher returns to both equity and debt holders on the capital invested in the business.
4. Return on equity (ROE) has demonstrated a consistent growth trajectory from 15.71% in 2019 to 22.40% in 2023, highlighting the company's effectiveness in generating profits for its shareholders relative to their equity investment.
Overall, the profitability ratios of Watsco Inc. indicate a positive performance in terms of generating returns for both its asset base and equity holders. This suggests that the company is effectively utilizing its resources to drive profitability and create value for its stakeholders.