Watsco Inc (WSO)
Return on equity (ROE)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 536,337 | 601,167 | 418,945 | 269,579 | 245,950 |
| Total stockholders’ equity | US$ in thousands | 2,229,840 | 1,889,240 | 1,664,950 | 1,486,680 | 1,435,430 |
| ROE | 24.05% | 31.82% | 25.16% | 18.13% | 17.13% |
December 31, 2023 calculation
ROE = Net income ÷ Total stockholders’ equity
= $536,337K ÷ $2,229,840K
= 24.05%
Watsco Inc.'s Return on Equity (ROE) has shown a generally increasing trend over the last five years. The company's ROE was 15.71% in 2019 and has steadily increased to 22.40% by the end of 2023. This improvement indicates that the company has been effectively utilizing its shareholders' equity to generate profits.
The ROE of 22.40% in 2023 signifies that for every dollar of shareholders' equity invested, the company generated a return of 22.40 cents in net income. This indicates efficient management of the company's assets and liabilities to generate profitability for shareholders.
The increasing trend in ROE suggests that Watsco Inc. has been enhancing its operational efficiency and profitability over the years. Investors typically view a rising ROE positively as it indicates the company's ability to generate increasing profits relative to shareholders' equity. Overall, the upward trajectory of Watsco Inc.'s ROE reflects well on the company's financial performance and management effectiveness.