Watsco (NYSE:WSO) Announces Earnings Results

Watsco (NYSE:WSO) announced its earnings results on Wednesday. The construction company reported $4.00 earnings per share (EPS) for the quarter, missing the consensus estimate of $4.41 by ($0.41), FiscalAI reports. The business had revenue of $2.10 billion for the quarter, compared to analysts’ expectations of $2.14 billion. Watsco had a net margin of 6.53% and a return on equity of 14.40%. The company’s revenue for the quarter was up 2.1% compared to the same quarter last year. During the same period in the prior year, the business 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 Stock Up 0.4%

NYSE:WSO traded up $1.32 during midday trading on Friday, hitting $312.05. The company had a trading volume of 159,851 shares, compared to its average volume of 437,469. The company has a market capitalization of $12.69 billion, a PE ratio of 26.95 and a beta of 1.02. Watsco has a 52-week low of $300.66 and a 52-week high of $459.00. The stock’s fifty day moving average price is $380.79 and its 200-day moving average price is $392.93.

Watsco Announces Dividend

The business also recently announced a quarterly dividend, which will be paid on Friday, July 31st. Investors of record on Thursday, July 16th will be given a $3.30 dividend. The ex-dividend date is Thursday, July 16th. This represents a $13.20 annualized dividend and a yield of 4.2%. Watsco’s payout ratio is 109.54%.

Analysts Set New Price Targets

WSO has been the subject of several research reports. Weiss Ratings restated a “hold (c)” rating on shares of Watsco in a report on Friday, June 26th. Morgan Stanley boosted their target price on shares of Watsco from $370.00 to $405.00 and gave the company an “equal weight” rating in a research note on Friday, July 10th. Stephens raised their price target on shares of Watsco from $475.00 to $485.00 and gave the stock an “overweight” rating in a research note on Wednesday, April 29th. Wall Street Zen raised shares of Watsco from a “sell” rating to a “hold” rating in a report on Saturday, May 2nd. Finally, Robert W. Baird set a $400.00 price objective on Watsco in a report on Thursday. Two research analysts have rated the stock with a Buy rating and nine have assigned a Hold rating to the stock. According to data from MarketBeat, the stock currently has a consensus rating of “Hold” and a consensus target price of $395.50.

Hedge Funds Weigh In On Watsco

Hedge funds and other institutional investors have recently modified their holdings of the company. Bamco Inc. NY bought a new position in shares of Watsco during the 4th quarter valued at about $35,000. Quarry LP bought a new stake in Watsco in the 4th quarter worth approximately $37,000. Resources Management Corp CT ADV lifted its position in Watsco by 150.0% in the 4th quarter. Resources Management Corp CT ADV now owns 125 shares of the construction company’s stock worth $42,000 after buying an additional 75 shares during the last quarter. Los Angeles Capital Management LLC purchased a new stake in Watsco in the fourth quarter worth approximately $59,000. Finally, Headlands Technologies LLC purchased a new stake in Watsco in the second quarter worth approximately $121,000. 89.71% of the stock is currently owned by hedge funds and other institutional investors.

Watsco Company Profile

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.