Critical Comparison: Watsco (NYSE:WSO) & Lavoro (NASDAQ:LVRO)

Lavoro (NASDAQ:LVRO) and Watsco (NYSE:WSO) are both industrials companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.

Institutional & Insider Ownership

2.5% of Lavoro shares are held by institutional investors. Comparatively, 89.7% of Watsco shares are held by institutional investors. 12.9% of Watsco shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Lavoro has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, Watsco has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Lavoro and Watsco, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lavoro	1	0	0	0	1.00
Watsco	0	9	2	0	2.18

Watsco has a consensus target price of $395.50, suggesting a potential upside of 19.80%. Given Watsco’s stronger consensus rating and higher possible upside, analysts clearly believe Watsco is more favorable than Lavoro.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Lavoro	N/A	N/A	N/A
Watsco	6.53%	14.40%	10.17%

Valuation and Earnings

This table compares Lavoro and Watsco”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lavoro	$6.52 billion	0.01	-$466.28 million	($1.57)	-0.19
Watsco	$7.28 billion	1.84	$496.99 million	$11.53	28.63

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

Summary

Watsco beats Lavoro on 14 of the 14 factors compared between the two stocks.

About Lavoro

Lavoro Limited operates as an agricultural inputs retailer. The company operates through three segments: Brazil Cluster, LATAM Cluster, and Crop Care Cluster. It distributes agricultural inputs, such as crop protection, seeds, fertilizers, foliar fertilizers, biologicals, adjuvants, organominerals, and others for the agricultural industry. The company also produces specialty fertilizers, crop protection products, and biological crop inputs. It operates in Brazil, Colombia, and Uruguay. The company sells its products through its physical stores and digital channel. Lavoro Limited was founded in 2017 and is headquartered in São Paulo, Brazil.

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.