Applied Industrial Technologies, Inc. (AIT) vs Watsco, Inc. (WSO)

Applied Industrial Technologies, Inc. and Watsco, Inc. are both Industrial Distribution companies. Applied Industrial Technologies, Inc. and Watsco, Inc. are of similar size ($13.2B and $12.2B). Watsco, Inc. trades at the lower P/E: 27.5× against 30.1×. Applied Industrial Technologies, Inc. grew revenue faster over the last twelve months: 8.84% against −2.98%. Applied Industrial Technologies, Inc. has the higher net margin (8.35% vs 6.54%) and the higher return on invested capital (17.2% vs 13.6%). Both pay a dividend; Watsco, Inc. yields more (2.38% vs 0.78%). Across the 23 metrics below, Watsco, Inc. leads on 13 and Applied Industrial Technologies, Inc. on 10.

Valuation

Metric AIT WSO Industrial Distribution median
P/E 30.08 27.51 28.81
P/S 2.51 1.66 1.10
P/B 6.70 3.49 3.59
Price to free cash flow 27.03 17.36 22.50
EV/EBITDA 20.34 16.15 15.13
EV/Sales 2.54 1.62 1.31
Earnings yield 3.32% 3.63% 3.16%
Free cash flow yield 3.70% 5.76% 3.85%

Profitability

Metric AIT WSO Industrial Distribution median
Gross margin 30.34% 27.51% 30.34%
Operating margin 11.06% 9.40% 8.06%
Net margin 8.35% 6.54% 4.95%
Free cash flow margin 9.29% 9.57% 4.67%
Return on equity 22.37% 14.23% 14.29%
Return on assets 13.40% 9.71% 5.30%
Return on invested capital 17.20% 13.64% 8.13%

Growth

Metric AIT WSO Industrial Distribution median
Revenue growth (TTM) 8.84% (2.98%) 7.80%
EPS growth (last fiscal year) 8.20% (7.89%) —
Revenue growth, 5-year CAGR 8.95% 7.45% 9.01%
Net income growth, 5-year CAGR 23.42% 15.06% 0.99%

Health

Metric AIT WSO Industrial Distribution median
Debt to equity 0.14 0.04 0.53
Current ratio 2.58 3.20 2.47
Net debt to EBITDA 0.22 (0.95) 1.17

Dividend

Metric AIT WSO Industrial Distribution median
Dividend yield 0.78% 2.38% 1.54%
Payout ratio 0.16 0.63 0.00

Size

Metric AIT WSO Industrial Distribution median
Market cap 12.20b 13.21b 5.60b

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