Is Watsco, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Watsco, Inc. has moved from attractive to very expensive, indicating a shift towards overvaluation. The company appears overvalued based on its high valuation ratios, including a P/E ratio of 34, a Price to Book Value of 7.49, and an EV to EBITDA of 25.34. In comparison to peers, Watsco's P/E ratio is significantly higher than Otis Worldwide Corp. at 21.12 and Masco Corp. at 18.57, further supporting the conclusion of overvaluation.
Additionally, Watsco's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -21.75% compared to the index's 13.30%. This underperformance, along with the elevated valuation metrics, reinforces the assessment that Watsco, Inc. is currently overvalued.