WSO
Watsco, Inc.
$279.90
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 17.7% above fair value
You pay
$279.90
Bear
$192.28
Fair
$237.87
Bull
$279.73
Bear
$192.28
-31.3%
4% stage 1 growth, 11% discount
Fair
$237.87
-15.0%
7% stage 1 growth, 11% discount
Bull
$279.73
-0.1%
10% stage 1 growth, 11% discount
Adjust Assumptions
7.4%
11.0%
3.0%
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
37%
Implied Market Multiple
21.1x
Market is pricing in (growth)
9.7%
vs 7.4% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (27 analysts)
$405.00
Divergence from AlphaVal
41%
Summary
Using a two-stage FCF DCF with 7% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $237.87 per share.
Warnings
Wall Street's average price target is $405.00 (from 27 analysts). Our estimate is 41% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions