WatscoSTU:WC3 -2.00%85 Return-on-Tangible-Equity is 15.15% as of Mar. 2026, which is 54% below its 10-year median of 32.60. GuruFocus rates STU:WC3 with a GF Score™ of 85/100 and a GF Value™ of €349.61 (Fairly Valued). The stock has 3 warning signs investors should review. Among 155 Industrial Distribution companies, Watsco ranks better than 75.48% on this metric.
Return-on-Tangible-Equity is calculated as Net Income divided by its average total shareholder tangible equity. Total shareholder tangible equity equals to Total Stockholders Equity minus Intangible Assets. Watsco's annualized net income for the quarter that ended in Mar. 2026 was €274 Mil. Watsco's average shareholder tangible equity for the quarter that ended in Mar. 2026 was €1,805 Mil. Therefore, Watsco's annualized Return-on-Tangible-Equity for the quarter that ended in Mar. 2026 was 15.15%.
The historical rank and industry rank for Watsco's Return-on-Tangible-Equity or its related term are showing as below:
STU:WC3'
s Return-on-Tangible-Equity Range Over the Past 10 Years
Min: 23.77 Med: 32.6 Max: 51.66
Current: 23.77
During the past 13 years, Watsco's highest Return-on-Tangible-Equity was 51.66%. The lowest was 23.77%. And the median was 32.60%.
STU:WC3's Return-on-Tangible-Equity is ranked better than 75.48% of 155
companies
in the Industrial Distribution industry
Industry Median: 8.96
vs STU:WC3: 23.77
Return-on-Tangible-Equity measures the rate of return on the ownership interest (shareholder's tangible equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' tangible equity (shareholders equity minus intangibles). Return-on-Tangible-Equity shows how well a company uses investment funds to generate earnings growth. Return-on-Tangible-Equitys between 15% and 20% are considered desirable.
Be Aware
Net Income is used.
Because a company can increase its Return-on-Tangible-Equity by having more financial leverage, it is important to watch the leverage ratio when investing in high Return-on-Tangible-Equity companies. Like Return-on-Tangible-Asset, Return-on-Tangible-Equity is calculated with only 12 months data. Fluctuations in company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Asset light businesses require very few assets to generate very high earnings. Their Return-on-Tangible-Equitys can be extremely high.
Watsco Return-on-Tangible-Equity Related Terms
Watsco Return-on-Tangible-Equity Historical Data
* Premium members only.
The historical data trend for Watsco's Return-on-Tangible-Equity 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.
STU:WC3 vs WCC, QXO, AIT: Return-on-Tangible-Equity Comparison
For the Industrial Distribution subindustry, Watsco's Return-on-Tangible-Equity, along with its competitors' market caps and Return-on-Tangible-Equity 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 Return-on-Tangible-Equity vs Industrial Distribution Industry
For the Industrial Distribution industry and Industrials sector, Watsco's Return-on-Tangible-Equity distribution charts can be found below:
* The bar in red indicates where Watsco's Return-on-Tangible-Equity 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.
In the calculation of annual Return-on-Tangible-Equity, the net income of the last fiscal year and the average total shareholder tangible equity over the fiscal year are used. In calculating the quarterly data,
the net income data used here is four times the quarterly (Mar. 2026) net income data.
Return-on-Tangible-Equity is displayed in the 10-year financial page.
What does a Return-on-Tangible-Equity of 15.15% mean?
Watsco (STU:WC3) has a Return-on-Tangible-Equity of 15.15% as of Mar. 2026. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on Watsco and its competitors. This is 54% below median its historical median of 32.60. Over the past decade, Watsco's Return-on-Tangible-Equity has ranged from 23.77 to 51.66. According to the industry distribution chart, Watsco ranks #38 out of 155 companies in the Industrial Distribution industry, placing it in the top 24.5%.
Is Watsco's Return-on-Tangible-Equity too high?
Watsco's current Return-on-Tangible-Equity of 15.15% is 54% below median its 10-year median of 32.60. Over the past 10 years, this metric has ranged from a low of 23.77 to a high of 51.66. The Industrial Distribution industry median Return-on-Tangible-Equity is 8.96. Watsco's value of 15.15% is 69.1% above this industry median. Based on the distribution chart, Watsco ranks #38 out of 155 companies in the Industrial Distribution industry, which is in the top quartile — a strong position relative to peers. Overall, Watsco has a GF Score™ of 85/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Watsco's Return-on-Tangible-Equity compare to WCC and QXO?
According to the Industrial Distribution industry distribution chart, Watsco ranks #38 out of 155 companies for Return-on-Tangible-Equity. This places Watsco in the top 25% of its industry — outperforming the majority of peers. The industry median Return-on-Tangible-Equity is 8.96. Watsco's value of 15.15% is 69.1% above this benchmark. Historically, Watsco's own Return-on-Tangible-Equity has ranged from 23.77 to 51.66 over the past decade. While the company's 10-year median is 32.60 vs. the industry median of 8.96, Watsco has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Return-on-Tangible-Equity for an Industrial Distribution company?
The median Return-on-Tangible-Equity among Industrial Distribution companies is 8.96, based on 155 companies in the industry. Companies in the top quartile (top 25%) have a Return-on-Tangible-Equity significantly above this median, while those in the bottom quartile fall well below. However, Return-on-Tangible-Equity should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Watsco's current Return-on-Tangible-Equity of 15.15% is 69.1% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Return-on-Tangible-Equity mean?
A high Return-on-Tangible-Equity can signal that a stock is expensive relative to its fundamentals. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on Watsco and its competitors. For the Industrial Distribution industry, the median Return-on-Tangible-Equity is 8.96 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Watsco's current Return-on-Tangible-Equity is 15.15%, which is 54% below median its own 10-year median of 32.60. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Watsco stock overvalued right now?
Based on GuruFocus' analysis, Watsco (STU:WC3) is currently considered Fairly Valued. The stock's GF Value™ is €349.61, compared to a current price of €323.80 — trading 7.4% below its estimated fair value. The current Return-on-Tangible-Equity is 15.15%, which is 54% below median its 10-year median of 32.60 and 69.1% above the Industrial Distribution industry median of 8.96. Watsco's overall GF Score™ is 85/100 with 3 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Return-on-Tangible-Equity calculated?
Return-on-Tangible-Equity is calculated from a company's financial statements. For Watsco (STU:WC3), the current Return-on-Tangible-Equity is 15.15% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Watsco (STU:WC3) Overvalued in 2026?
Based on GuruFocus' analysis, Watsco stock appears to be undervalued.
The current stock price of €323.80 is trading 7.4% below its estimated GF Value™ of €349.61.
GuruFocus considers Watsco to be Fairly Valued.
Key valuation signals for STU:WC3:
Return-on-Tangible-Equity: 15.15% (54% below median its 10-year median of 32.60)
GF Value™: €349.61 vs. price of €323.80 (7.4% below fair value)
Industry Position: 69.1% above the Industrial Distribution median (#38 of 155)
No single metric tells the full story. See the STU:WC3 stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Watsco is the largest HVAC and refrigeration products distributor in North America with approximately 13% market share. The company primarily operates in the United States (90% of revenue) with significant exposure in the Sunbelt states. Watsco also has operations in Canada, Latin America, and the Caribbean. The company's customer base comprises more than 120,000 dealers and contractors serving the replacement and new-construction HVAC/R markets for residential and light-commercial applications. As much as 20% of residential HVAC units are distributed through Watsco in any given year. Revenue is approximately 75%-80% residential HVAC and 20%-25% commercial, with relatively small exposure to more complex "applied" solutions.
85GF Score
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