Gross Margin % is calculated as gross profit divided by its revenue. Watsco's Gross Profit for the
three
months ended in Dec. 2023 was $414 Mil. Watsco's Revenue for the
three
months ended in Dec. 2023 was $1,603 Mil. Therefore, Watsco's Gross Margin % for the quarter that ended in Dec. 2023 was 25.85%.
The historical rank and industry rank for Watsco's Gross Margin % or its related term are showing as below:
WSO'
s Gross Margin % Range Over the Past 10 Years
Min: 24.19 Med: 24.53 Max: 27.91
Current: 27.35
During the past 13 years, the highestGross Margin % of Watsco was 27.91%. The lowest was 24.19%. And the median was 24.53%.
WSO's Gross Margin % is ranked better than 58.74% of 143
companies
in the Industrial Distribution industry
Industry Median: 23.42
vs WSO: 27.35
Watsco had a gross margin of 25.85% for the quarter that ended in Dec. 2023 => Competition eroding margins
The 5-Year average Growth Rate of Gross Margin for Watsco was 3.00% per year.
Watsco Gross Margin % Historical Data
The historical data trend for Watsco's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Industrial Distribution subindustry, Watsco's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Watsco's Gross Margin % Distribution in the Industrial Distribution Industry
For the Industrial Distribution industry and Industrials sector, Watsco's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Watsco's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Watsco (NYSE:WSO) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Watsco had a gross margin of 25.85% for the quarter that ended in Dec. 2023 => Competition eroding margins
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Watsco Gross Margin % Related Terms
Thank you for viewing the detailed overview of Watsco's Gross Margin % provided by GuruFocus.com. Please click on the following links to see related term pages.
Watsco is the largest heating, ventilation, air-conditioning, and refrigeration products distributor in North America. The company primarily operates in the United States (91% of 2022 revenue) with significant exposure in the Sunbelt states. Watsco also has operations in Canada (5% of sales) and Latin America and the Caribbean (4% of sales). The company's customer base consists of more than 120,000 dealers and contractors that serve the replacement and new construction HVACR markets for residential and light commercial applications.
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