Watsco (NYSE:WSO) and Winnebago Industries (NYSE:WGO) are both mid-cap construction companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.
Dividends
Watsco pays an annual dividend of $7.10 per share and has a dividend yield of 3.0%. Winnebago Industries pays an annual dividend of $0.48 per share and has a dividend yield of 0.6%. Watsco pays out 109.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Winnebago Industries pays out 14.0% of its earnings in the form of a dividend. Watsco has raised its dividend for 1 consecutive years and Winnebago Industries has raised its dividend for 1 consecutive years.
Analyst Ratings
This is a summary of recent ratings and target prices for Watsco and Winnebago Industries, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Watsco | 0 | 7 | 1 | 0 | 2.13 |
Winnebago Industries | 0 | 1 | 11 | 0 | 2.92 |
Watsco presently has a consensus price target of $217.25, indicating a potential downside of 8.61%. Winnebago Industries has a consensus price target of $72.50, indicating a potential downside of 8.30%. Given Winnebago Industries' stronger consensus rating and higher possible upside, analysts clearly believe Winnebago Industries is more favorable than Watsco.
Risk and Volatility
Watsco has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Winnebago Industries has a beta of 2.13, meaning that its stock price is 113% more volatile than the S&P 500.
Earnings and Valuation
This table compares Watsco and Winnebago Industries' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Watsco | $4.77 billion | 1.92 | $245.95 million | $6.50 | 36.57 |
Winnebago Industries | $1.99 billion | 1.34 | $111.80 million | $3.44 | 22.98 |
Watsco has higher revenue and earnings than Winnebago Industries. Winnebago Industries is trading at a lower price-to-earnings ratio than Watsco, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
81.5% of Watsco shares are owned by institutional investors. Comparatively, 87.8% of Winnebago Industries shares are owned by institutional investors. 13.6% of Watsco shares are owned by company insiders. Comparatively, 3.8% of Winnebago Industries shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares Watsco and Winnebago Industries' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Watsco | 4.77% | 13.38% | 8.80% |
Winnebago Industries | 2.37% | 9.21% | 4.80% |
Summary
Watsco beats Winnebago Industries on 9 of the 16 factors compared between the two stocks.