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 current metrics, with a P/E ratio of 34, a Price to Book Value of 7.49, and an EV to EBITDA of 25.34. In comparison, peers such as Otis Worldwide Corp. have a P/E of 21.12 and EV to EBITDA of 19.78, while Carlisle Cos., Inc. shows a P/E of 33.32 and EV to EBITDA of 23.13, highlighting Watsco's premium valuation relative to its industry.
Recent performance also reflects this valuation concern, as Watsco's year-to-date return of -21.75% significantly lags behind the S&P 500's return of 13.30% over the same period, further supporting the notion of overvaluation.