Value
5.1/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 4.5 |
| P/S | 9.0 |
| EV/EBITDA | 0.1 |
| PEG | 5.5 |
- ▸PEG: 1.38
WSO-B · Why this verdict
Why Watsco (WSO-B) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Watsco's Class B shares trade with a broken momentum profile — RSI near zero and the price below its 200-day moving average — while the underlying business carries a 7/9 Piotroski score and strong balance sheet, creating a structural tension between poor price action and sound business fundamentals.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The price momentum score of 2.5 out of 10 reflects capitulation-level conditions with RSI near zero and the stock trading below its 200-day moving average, indicating the market is pricing in significant near-term deterioration. Momentum breakdown | Momentum score rises above 5.0 and RSI recovers above 40 within 6 months as selling pressure exhausts. | →Stable |
| CounterStocks with capitulation-level RSI readings near zero are statistically more likely to be at short-term bottoms than the start of sustained downtrends, making the risk/reward asymmetric to the upside. | ||
Analyst earnings estimates have fallen 16% over the past 30 days, indicating a broadening consensus that near-term earnings will disappoint relative to prior expectations. Catalyst breakdown | 30-day earnings estimate revision turns positive within the next 2 quarters, rising above 0%. | →Stable |
| CounterEstimate cuts often overcorrect at cycle troughs, and a single positive earnings surprise can reverse the negative estimate revision cycle. | ||
The business sustains a Piotroski F-Score of 7 out of 9, a current ratio of 9.7, and a free cash flow quality score of 7.3, indicating financial resilience even as price and estimates deteriorate. Quality breakdown | Piotroski F-Score remains at 6 or above and current ratio stays above 7.0 over the next 12 months. | →Stable |
| CounterBalance sheet quality can lag operational deterioration; a sustained earnings decline would eventually pressure free cash flow and current ratio readings. | ||
Despite weak momentum, technical indicators show a support and resistance score of 10.0 and a Bollinger score of 7.4, suggesting the price is near a well-defined support zone that may limit further downside. Technical breakdown | Price holds above the technical stop-loss level of $342.32 and does not decline more than 3% below current levels over the next 3 months. | →Stable |
| CounterTechnical support zones fail frequently in confirmed downtrends, and with the moving average slope still flat, the apparent support level may be tested multiple times before holding. | ||
The price momentum score of 2.5 out of 10 reflects capitulation-level conditions with RSI near zero and the stock trading below its 200-day moving average, indicating the market is pricing in significant near-term deterioration.
→StableMomentum breakdown
- Expectation
- Momentum score rises above 5.0 and RSI recovers above 40 within 6 months as selling pressure exhausts.
CounterStocks with capitulation-level RSI readings near zero are statistically more likely to be at short-term bottoms than the start of sustained downtrends, making the risk/reward asymmetric to the upside.
Analyst earnings estimates have fallen 16% over the past 30 days, indicating a broadening consensus that near-term earnings will disappoint relative to prior expectations.
→StableCatalyst breakdown
- Expectation
- 30-day earnings estimate revision turns positive within the next 2 quarters, rising above 0%.
CounterEstimate cuts often overcorrect at cycle troughs, and a single positive earnings surprise can reverse the negative estimate revision cycle.
The business sustains a Piotroski F-Score of 7 out of 9, a current ratio of 9.7, and a free cash flow quality score of 7.3, indicating financial resilience even as price and estimates deteriorate.
→StableQuality breakdown
- Expectation
- Piotroski F-Score remains at 6 or above and current ratio stays above 7.0 over the next 12 months.
CounterBalance sheet quality can lag operational deterioration; a sustained earnings decline would eventually pressure free cash flow and current ratio readings.
Despite weak momentum, technical indicators show a support and resistance score of 10.0 and a Bollinger score of 7.4, suggesting the price is near a well-defined support zone that may limit further downside.
→StableTechnical breakdown
- Expectation
- Price holds above the technical stop-loss level of $342.32 and does not decline more than 3% below current levels over the next 3 months.
CounterTechnical support zones fail frequently in confirmed downtrends, and with the moving average slope still flat, the apparent support level may be tested multiple times before holding.
Per-dimension breakdown
Quality
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.2 |
| ROA | 6.3 |
| Gross margin | 1.6 |
| Op margin | 2.7 |
| Net margin | 3.4 |
| Current ratio | 9.7 |
| FCF quality | 7.3 |
| Moat | 5.8 |
| Piotroski F | 7.8 |
- ▸Strong Piotroski F-Score: 7/9
Growth
1.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.5 |
| EPS growth | 1.4 |
Momentum
5.5/10data confidence 75%| Component | Sub-score |
|---|---|
| MACD | 10.0 |
| OBV | 5.5 |
| MA position | 1.0 |
- ▸Below 200-MA, MA slope -1.6%/30d — confirmed downtrend
Sentiment
3.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| erm sentiment | 0.0 |
- ▸Estimates falling as sentiment proxy (-16.0%)
Insider
5.0/10data confidence 50%Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 5.7 |
| growth rank | 0.6 |
Technical
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.4 |
| support resistance | 10.0 |
| 52w position | 5.3 |
Risk (lower is worse)
8.3/10data confidence 80%| Component | Sub-score |
|---|---|
| short interest | 10.0 |
| days to cover | 7.1 |
| beta | 6.9 |
| debt equity | 9.4 |
Catalyst
3.1/10data confidence 50%| Component | Sub-score |
|---|---|
| erm | 1.0 |
| dividend safety | 5.2 |
- ▸Estimates down -16.0% (30d)
- ▸Dividend: 377.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.5>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
5.0%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 8.3) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 0.00 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 8.3, Technical at 7.2, and Quality at 5.6; the weakest are Growth at 1.9, Sentiment at 3.0, and Catalyst at 3.1. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The price momentum score of 2.5 out of 10 reflects capitulation-level conditions with RSI near zero and the stock trading below its 200-day moving average, indicating the market is pricing in significant near-term deterioration.
Trip ifMomentum score falls below 1.5, dropping more than 1 point below the current 2.5 out of 10.
- P2Analyst earnings estimates have fallen 16% over the past 30 days, indicating a broadening consensus that near-term earnings will disappoint relative to prior expectations.
Trip if30-day analyst estimate revision falls below -25%, declining more than 9 percentage points beyond the current -16%.
- P3The business sustains a Piotroski F-Score of 7 out of 9, a current ratio of 9.7, and a free cash flow quality score of 7.3, indicating financial resilience even as price and estimates deteriorate.
Trip ifPiotroski F-Score falls below 5, declining more than 2 points from the current 7 out of 9.
- P4Despite weak momentum, technical indicators show a support and resistance score of 10.0 and a Bollinger score of 7.4, suggesting the price is near a well-defined support zone that may limit further downside.
Trip ifPrice drops below $342.32, reaching the stop-loss level and falling more than 2% below the current $350.00.