Watsco (WSO)
NYSE:WSO
Want to see WSO full AI Analyst Report?
Top Page
Watsco
(NYSE:WSO)
Select Model
Select Model
Rating:77Outperform
Price Target:
$498.00
▲(15.74% Upside)
Action:ReiteratedDate:04/30/26
WSO scores well on financial performance (low leverage, strong free cash flow and resilient margins) and is supported by a constructive technical trend. The primary offset is valuation (high P/E), while the latest earnings call was net positive but flagged inventory and OEM pricing uncertainty as near-term risks.
Positive Factors
Cash generation
Sustained high free cash flow that closely tracks net income provides durable funding for dividends, buy‑and‑build acquisitions, and technology investment. Strong cash conversion reduces reliance on external financing and cushions the business through HVAC demand cycles.
Negative Factors
Revenue growth normalization
Top‑line has cooled from the strong 2022–2023 period, reflecting a more mature, slower growth phase. Persistent modest or negative revenue trends constrain upside from operating leverage and make long‑term EPS expansion more dependent on margin programs and M&A execution.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Sustained high free cash flow that closely tracks net income provides durable funding for dividends, buy‑and‑build acquisitions, and technology investment. Strong cash conversion reduces reliance on external financing and cushions the business through HVAC demand cycles.
Read all positive factors
Watsco (WSO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$17.12B
Dividend Yield3.38%
Average Volume (3M)499.45K
Price to Earnings (P/E)43.7
Beta (1Y)1.01
Revenue Growth-4.53%
EPS Growth-7.76%
CountryUS
Employees7,220
SectorIndustrials
Sector Strength72
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)12.06
Shares Outstanding34,944,443
10 Day Avg. Volume508,872
30 Day Avg. Volume499,452
Financial Highlights & Ratios
PEG Ratio-3.14
Price to Book (P/B)4.59
Price to Sales (P/S)1.76
P/FCF Ratio23.85
Enterprise Value/Market Cap1.00
Enterprise Value/Revenue2.37
Enterprise Value/Gross Profit8.36
Enterprise Value/Ebitda22.08
Forecast
1Y Price Target
$433.83Price Target Upside0.83% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)12.67
Revenue Forecast (FY)$7.53B
Watsco Business Overview & Revenue Model
Company Description
Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, refrigeration equipment, and related parts and supplies. The company distributes equipment comprising residential ducted and ductless air conditioners, such as ga...
How the Company Makes Money
Watsco makes money primarily by distributing HVAC/R products and earning a gross margin on the difference between its purchase cost from manufacturers and the resale price to customers (primarily HVAC contractors). Its core revenue stream is the s...
Watsco Key Performance Indicators (KPIs)
Watsco Earnings Call Summary
Earnings Call Date:Apr 28, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 04, 2026
Earnings Call Sentiment Positive
The call presented a predominately constructive tone: management highlighted stability returning after the A2L transition, modest top-line growth (2%), strong e-commerce and OnCallAir momentum (16% and 20% growth respectively, with GMV > $2B expected), a strategic acquisition (Jackson Supply, $230M, +25 locations), intact gross margins, flat SG&A and a debt-free balance sheet. Offsetting items were ongoing unit-volume pressure (though stabilizing), a notable Q1 inventory build, and uncertainty around forthcoming OEM price increases and seasonal comps. Overall the positive drivers (digital growth, acquisition, margin programs, strong balance sheet and improving seasonal momentum) outweigh the transitory operational uncertainties.Positive Updates
Modest Sales Growth in Q1
U.S. sales increased 2% in the first quarter, reflecting a maturing A2L product mix and improved sales mix toward higher-efficiency systems while unit sales were lower.
Negative Updates
Unit Volume Pressure Persisted
Although stabilizing, unit volumes were still below prior levels during the quarter and management signaled the market is 'not yet fully healed' after the A2L transition and other disruptions.
Read all updates
Q1-2026 Updates
Positive
Negative
Modest Sales Growth in Q1
U.S. sales increased 2% in the first quarter, reflecting a maturing A2L product mix and improved sales mix toward higher-efficiency systems while unit sales were lower.
Read all positive updates
Company Guidance
Guidance emphasized a return to a simpler, more stable 2026: Q1 U.S. sales rose 2% with unit volumes stabilizing and March exiting the quarter up high-single-digits (momentum sustained into the first three weeks of April), e‑commerce sales grew 16% and OnCallAir customer sales jumped 20% with management forecasting OnCallAir gross merchandise value to exceed $2.0 billion this year; gross margins “largely intact” in Q1 with a long‑term gross‑margin target of 30%, SG&A flat, and the company remaining debt‑free. Management expects inventory turns to improve (Q1 inventory rose but March-end units were fewer year‑over‑year), plans to reduce inventory investment to boost cash flow, and anticipates likely OEM price increases (details expected in Q2). They also announced the Jackson Supply acquisition (≈$230 million in annual sales, +25 locations, expected to close in Q2), noted non‑equipment is ~30% of Watsco (parts <10% of the company) and highlighted an $800 million Florida business with ~70% e‑commerce penetration.Watsco Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
86
Very Positive
Cash Flow
79
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.24B | 7.24B | 7.62B | 7.28B | 7.27B | 6.28B |
| Gross Profit | 2.05B | 2.03B | 2.04B | 1.99B | 2.03B | 1.67B |
| EBITDA | 778.38M | 781.43M | 792.10M | 803.72M | 840.59M | 656.65M |
| Net Income | 496.01M | 496.99M | 536.29M | 536.34M | 601.17M | 418.94M |
Balance Sheet | ||||||
| Total Assets | 4.65B | 4.46B | 4.53B | 3.73B | 3.49B | 3.09B |
| Cash, Cash Equivalents and Short-Term Investments | 592.68M | 733.28M | 781.94M | 210.11M | 147.50M | 118.27M |
| Total Debt | 476.20M | 478.79M | 447.46M | 505.06M | 390.53M | 454.21M |
| Total Liabilities | 1.43B | 1.23B | 1.47B | 1.11B | 1.24B | 1.09B |
| Stockholders Equity | 2.76B | 2.78B | 2.66B | 2.23B | 1.89B | 1.66B |
Cash Flow | ||||||
| Free Cash Flow | 695.31M | 535.52M | 743.01M | 526.48M | 536.31M | 324.10M |
| Operating Cash Flow | 728.35M | 569.61M | 773.10M | 561.95M | 571.96M | 349.57M |
| Investing Cash Flow | -249.54M | -98.12M | -290.67M | -41.34M | -33.84M | -148.58M |
| Financing Cash Flow | -520.41M | -568.12M | -158.53M | -460.08M | -503.96M | -228.60M |
Watsco Technical Analysis
Positive
430.26
Price Trends
392.29
Positive
373.78
Positive
384.45
Positive
Market Momentum
10.84
Negative
69.94
Neutral
89.72
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WSO, the sentiment is Positive. The current price of 430.26 is above the 20-day moving average (MA) of 382.40, above the 50-day MA of 392.29, and above the 200-day MA of 384.45, indicating a bullish trend. The MACD of 10.84 indicates Negative momentum. The RSI at 69.94 is Neutral, neither overbought nor oversold. The STOCH value of 89.72 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WSO.
Watsco Risk Analysis
Watsco disclosed 17 risk factors in its most recent earnings report. Watsco reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Watsco Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $58.25B | 23.24 | 46.57% | 0.86% | 6.61% | -4.69% | |
77 Outperform | $17.12B | 43.67 | 17.84% | 3.38% | -4.53% | -7.76% | |
74 Outperform | $50.71B | 39.20 | 33.25% | 2.10% | 10.94% | 12.68% | |
65 Neutral | $46.80B | 27.41 | 35.56% | 1.35% | -0.80% | -9.36% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $6.84B | 34.55 | 32.50% | 2.15% | 1.79% | 1.72% | |
60 Neutral | $9.56B | 37.09 | 23.20% | ― | 2.77% | 8.42% |
* Industrials Sector Average
WSO
Watsco
424.75
-45.46
-9.67%
FAST
Fastenal Company
43.30
4.05
10.31%
POOL
Pool
184.77
-128.34
-40.99%
GWW
WW Grainger
1,226.09
167.85
15.86%
FERG
Ferguson PLC
243.98
70.05
40.28%
CNM
Core & Main
48.91
-4.38
-8.22%
Watsco Corporate Events
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
Watsco to Acquire Jackson Supply HVAC Distribution Business
Positive
Apr 29, 2026
On April 23, 2026, Watsco, Inc. agreed to acquire the assets and assume certain liabilities of the HVAC distribution business of Jackson Supply Company through its subsidiary, Jackson Supply LLC, in a stock-based transaction valued at $198 million...
Business Operations and StrategyDividendsFinancial DisclosuresM&A Transactions
Watsco Posts Flat Q1 Results, Boosts Dividend, Pursues Acquisition
Positive
Apr 28, 2026
On April 28, 2026, Watsco reported first-quarter 2026 results that showed flat revenue of $1.53 billion and gross profit of $428 million, with operating income down 2% and earnings per share down 3% to $1.87, reflecting lower unit volumes but high...
Business Operations and StrategyDividendsFinancial Disclosures
Watsco Posts Lower 2025 Revenue But Record Margins
Positive
Feb 17, 2026
On February 17, 2026, Watsco reported 2025 results marked by a 5% revenue decline to $7.24 billion but a record gross margin of 28.0%, as pricing technologies and OEM price actions offset weaker HVAC equipment volumes amid regulatory shifts and sl...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.