Watsco (NYSE:WSO) Posts Earnings Results, Misses Estimates By $0.33 EPS

Watsco (NYSE:WSO) announced its earnings results on Tuesday. The construction company reported $3.77 earnings per share for the quarter, missing analysts’ consensus estimates of $4.10 by ($0.33), FiscalAI reports. Watsco had a return on equity of 14.40% and a net margin of 6.53%. The business had revenue of $2.22 billion during the quarter, compared to the consensus estimate of $2.21 billion. During the same quarter in the prior year, the company earned $3.98 earnings per share. Watsco’s revenue was up 7.4% compared to the same quarter last year.

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

• Third-quarter sales rose 7% to a record $2.22 billion, with same-store sales up 4%, residential HVAC equipment sales up 7%, operating income of $225 million, and EPS of $3.77.
• Demand trends are improving, with October revenue up double digits including acquisitions, residential new construction up low double digits, and replacement activity up low single digits; management said industry volumes are stabilizing.
• Watsco completed its acquisition of The Granite Group, adding roughly $500 million in annual sales and 82 Northeast locations, while Jackson Supply grew 16% in its first quarter as part of Watsco.
• Technology initiatives continue to gain traction, with e-commerce sales up 12% year to date and representing 37% of trailing-12-month sales; management expects platforms such as SupplySync, VCR, Hydros, and AI to support future growth and efficiency.
• Gross margin was 26.4% and remains below Watsco’s long-term 30% target, pressured by customer and product mix, acquisitions, and comparisons with last year’s refrigerant shortage; larger-customer consolidation and higher metal, freight, and other costs may continue to create pressure.

Watsco Stock Performance

Shares of NYSE WSO traded up $0.49 during midday trading on Thursday, hitting $291.32. 30,267 shares of the stock traded hands, compared to its average volume of 470,506. Watsco has a one year low of $277.34 and a one year high of $459.00. The firm has a market capitalization of $12.02 billion, a P/E ratio of 25.38 and a beta of 1.06. The firm has a 50-day moving average of $306.35 and a two-hundred day moving average of $366.43.

Watsco Dividend Announcement

The business also recently announced a quarterly dividend, which will be paid on Friday, October 30th. Shareholders of record on Friday, October 16th will be paid a dividend of $3.30 per share. The ex-dividend date is Friday, October 16th. This represents a $13.20 dividend on an annualized basis and a yield of 4.5%. Watsco’s payout ratio is currently 114.48%.

Analyst Upgrades and Downgrades

WSO has been the subject of several analyst reports. Robert W. Baird set a $400.00 price target on shares of Watsco in a research report on Thursday, July 30th. Morgan Stanley reduced their target price on Watsco from $370.00 to $330.00 and set an “equal weight” rating on the stock in a research note on Monday, October 12th. Weiss Ratings lowered shares of Watsco from a “hold (c)” rating to a “hold (c-)” rating in a report on Tuesday, October 6th. Stephens restated an “overweight” rating and issued a $485.00 price objective on shares of Watsco in a report on Monday, August 17th. Finally, Mizuho decreased their price objective on Watsco from $350.00 to $325.00 and set a “neutral” rating for the company in a report on Thursday, October 15th. Two equities research analysts have rated the stock with a Buy rating and eight have issued a Hold rating to the company. Based on data from MarketBeat, Watsco currently has an average rating of “Hold” and an average target price of $373.62.

About Watsco

Watsco, Inc (NYSE: WSO) is a distributor of heating, ventilation, air conditioning and refrigeration (HVAC/R) equipment and related products. The company supplies residential and light commercial air-conditioning and heating systems, refrigeration equipment, replacement parts, and other supplies used by contractors and service professionals.

Watsco distributes products from leading HVAC/R manufacturers, including equipment and components such as air conditioners, heat pumps, furnaces, air handlers, thermostats, controls, motors and indoor air-quality products.