Analyzing Watsco (NYSE:WSO) and Carrier Global (NYSE:CARR)

Watsco (NYSE:WSO) and Carrier Global (NYSE:CARR) are both large-cap construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, earnings, dividends, profitability and analyst recommendations.

Profitability

This table compares Watsco and Carrier Global’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Watsco	6.98%	17.13%	11.86%
Carrier Global	25.45%	18.10%	6.76%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Watsco and Carrier Global, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Watsco	0	6	1	0	2.14
Carrier Global	0	6	11	1	2.72

Watsco presently has a consensus price target of $484.17, indicating a potential upside of 3.20%. Carrier Global has a consensus price target of $83.82, indicating a potential upside of 10.20%. Given Carrier Global’s stronger consensus rating and higher possible upside, analysts plainly believe Carrier Global is more favorable than Watsco.

Dividends

Watsco pays an annual dividend of $12.00 per share and has a dividend yield of 2.6%. Carrier Global pays an annual dividend of $0.90 per share and has a dividend yield of 1.2%. Watsco pays out 92.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Carrier Global pays out 13.9% of its earnings in the form of a dividend. Watsco has increased its dividend for 13 consecutive years and Carrier Global has increased its dividend for 4 consecutive years. Watsco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Watsco and Carrier Global”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Watsco	$7.62 billion	2.49	$536.29 million	$13.01	36.06
Carrier Global	$22.49 billion	2.90	$5.60 billion	$6.46	11.77

Carrier Global has higher revenue and earnings than Watsco. Carrier Global is trading at a lower price-to-earnings ratio than Watsco, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

89.7% of Watsco shares are owned by institutional investors. Comparatively, 91.0% of Carrier Global shares are owned by institutional investors. 12.9% of Watsco shares are owned by company insiders. Comparatively, 7.2% of Carrier Global shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Watsco has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Carrier Global has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Summary

Carrier Global beats Watsco on 12 of the 18 factors compared between the two stocks.

About Watsco

Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, refrigeration equipment, and related parts and supplies in the United States and internationally. The company distributes equipment, including residential ducted and ductless air conditioners, such as gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. It also offers parts comprising replacement compressors, evaporator coils, motors, and other component parts; and supplies, such as thermostats, insulation materials, refrigerants, ductworks, grills, registers, sheet metals, tools, copper tubing, concrete pads, tapes, adhesives, and other ancillary supplies, as well as plumbing and bathroom remodeling supplies. The company serves contractors and dealers that service the replacement and new construction markets for residential and light commercial central air conditioning, heating, and refrigeration systems. Watsco, Inc. was incorporated in 1956 and is headquartered in Miami, Florida.

About Carrier Global

Carrier Global Corporation provides heating, ventilating, and air conditioning (HVAC), refrigeration, fire, security, and building automation technologies in the United States, Europe, the Asia Pacific, and internationally. It operates through three segments: HVAC, Refrigeration, and Fire & Security. The HVAC segment provides products, controls, services, and solutions to meet the heating, cooling, and ventilation needs of residential and commercial customers. Its products include air conditioners, heating systems, heat pumps, controls, and aftermarket components, as well as aftermarket repair and maintenance services and building automation solutions. The Refrigeration segment offers transport refrigeration and monitoring products and services, as well as digital solutions for trucks, trailers, shipping containers, intermodal applications, food retail, and warehouse cooling; and commercial refrigeration solutions, such as refrigerated cabinets, freezers, systems, and controls. The Fire & Security segment provides various residential, commercial, and industrial technologies, including fire, flame, gas, smoke, and carbon monoxide detection; portable fire extinguishers; fire suppression systems; intruder alarms; access control systems; video management systems; and electronic controls. This segment also offers fire and security service, such as audit, design, installation, and system integration, as well as aftermarket maintenance and repair and monitoring services. It offers its products under the Autronica, Det-Tronics, Edwards, Aritech, Fireye, GST, Kidde, LenelS2, Marioff, Onity, and Supra; Carrier, Toshiba, Automated Logic, Bryant, CIAT, Day & Night, Heil, NORESCO, and Riello; and Carrier Commercial Refrigeration, Carrier Transicold, and Sensitech brands. Carrier Global Corporation was incorporated in 2019 and is headquartered in Palm Beach Gardens, Florida.