Watsco (NYSE:WSO) Issues Earnings Results

Watsco (NYSE:WSO) released its quarterly earnings results on Wednesday. The construction company reported $4.00 EPS for the quarter, missing analysts’ consensus estimates of $4.41 by ($0.41), FiscalAI reports. The firm had revenue of $2.10 billion during the quarter, compared to analyst estimates of $2.14 billion. Watsco had a net margin of 6.85% and a return on equity of 15.31%. Watsco’s quarterly revenue was up 2.1% on a year-over-year basis. During the same quarter last year, the firm earned $4.52 earnings per share.

Here are the key takeaways from Watsco’s conference call:

• Revenue grew 2% to $2.1 billion, with residential HVAC equipment sales up 5% on gains in both unit volume and pricing. Management characterized the market as stabilizing and expects roughly 4%–5% growth through July.
• Gross margin declined to 27.5% from 29.3% a year ago, primarily because 2025 included unusually aggressive OEM pricing and tariff-related benefits. Management views 27%–plus as the current baseline but reiterated a long-term goal of reaching 30% gross margin.
• Demand trends remain uneven: new construction is slowing in Florida and Texas, while Northern states are performing strongly; commercial sales fell about 8%, largely due to the VRF product transition to A2L refrigerants.
• Watsco completed its acquisition of Jackson Supply on June 1, adding approximately $20 million of June revenue and 25 Sunbelt locations. Management said Jackson’s leadership has an ambitious growth plan and that profitability is consistent with Watsco’s overall profile.
• Technology initiatives continued to gain traction, with e-commerce sales up 13% and reaching 37% of sales over the last 12 months, while OnCall Air proposals generated $1.9 billion in gross merchandise value. The company ended the quarter with $464 million in cash, no debt, and raised its annual dividend 10% to $13.20 per share.

Watsco Trading Down 15.2%

Shares of WSO stock traded down $56.02 on Wednesday, hitting $311.49. The stock had a trading volume of 765,752 shares, compared to its average volume of 425,708. Watsco has a twelve month low of $309.17 and a twelve month high of $459.99. The company has a fifty day moving average price of $383.45 and a two-hundred day moving average price of $393.67. The firm has a market cap of $12.67 billion, a P/E ratio of 25.79 and a beta of 1.02.

Watsco Dividend Announcement

The company also recently declared a quarterly dividend, which will be paid on Friday, July 31st. Stockholders of record on Thursday, July 16th will be given a dividend of $3.30 per share. This represents a $13.20 dividend on an annualized basis and a dividend yield of 4.2%. The ex-dividend date of this dividend is Thursday, July 16th. Watsco’s dividend payout ratio (DPR) is currently 109.54%.

Institutional Investors Weigh In On Watsco

A number of hedge funds and other institutional investors have recently made changes to their positions in the stock. Charles Schwab Investment Management Inc. lifted its holdings in shares of Watsco by 3.1% in the fourth quarter. Charles Schwab Investment Management Inc. now owns 1,559,965 shares of the construction company’s stock valued at $525,634,000 after purchasing an additional 46,799 shares in the last quarter. State Street Corp grew its stake in shares of Watsco by 1.4% during the 3rd quarter. State Street Corp now owns 1,238,121 shares of the construction company’s stock worth $500,572,000 after acquiring an additional 16,595 shares in the last quarter. Corient Private Wealth LLC raised its holdings in shares of Watsco by 202.6% in the fourth quarter. Corient Private Wealth LLC now owns 472,182 shares of the construction company’s stock valued at $159,102,000 after purchasing an additional 316,129 shares during the last quarter. Captrust Financial Advisors boosted its stake in shares of Watsco by 0.3% during the 2nd quarter. Captrust Financial Advisors now owns 389,104 shares of the construction company’s stock worth $171,836,000 after buying an additional 1,234 shares during the last quarter. Finally, Northern Trust Corp grew its stake in Watsco by 1.2% in the third quarter. Northern Trust Corp now owns 328,796 shares of the construction company’s stock valued at $132,932,000 after purchasing an additional 3,922 shares in the last quarter. 89.71% of the stock is currently owned by institutional investors and hedge funds.

Analyst Upgrades and Downgrades

Several research analysts have recently commented on WSO shares. DA Davidson started coverage on Watsco in a report on Tuesday, June 16th. They issued a “neutral” rating and a $385.00 target price on the stock. Robert W. Baird cut their price objective on Watsco from $460.00 to $420.00 and set an “outperform” rating for the company in a research report on Tuesday. Weiss Ratings reissued a “hold (c)” rating on shares of Watsco in a research note on Friday, June 26th. Wall Street Zen upgraded Watsco from a “sell” rating to a “hold” rating in a report on Saturday, May 2nd. Finally, Morgan Stanley increased their price objective on shares of Watsco from $370.00 to $405.00 and gave the stock an “equal weight” rating in a report on Friday, July 10th. Two investment analysts have rated the stock with a Buy rating and nine have assigned a Hold rating to the stock. Based on data from MarketBeat.com, Watsco has an average rating of “Hold” and an average target price of $404.88.

About Watsco

Watsco, Inc is the largest distributor of heating, ventilation, air conditioning and refrigeration (HVAC/R) equipment, parts and supplies in the United States. Headquartered in Miami, Florida, the company operates a network of more than 600 branches across the continental U.S., Canada and Puerto Rico. Watsco serves residential and commercial contractors by providing essential components for climate control systems, including air conditioners, furnaces, heat pumps, coils, refrigerants, controls and electrical and piping supplies.

Founded in 1947, Watsco has grown from a single regional distributor into an industry leader through a combination of organic expansion, acquisitions and strategic partnerships with original equipment manufacturers such as Carrier, Trane, Goodman and Lennox.