Watsco, Inc. (NYSE:WSO) Receives Average Recommendation of "Hold" from Brokerages

Key Points

• Analyst consensus is “Hold”: Eight of 11 brokerages rate Watsco neutral, compared with two buys and one sell. The average 12-month price target is $395.50, above the stock’s reported $320.08 price.
• Recent performance missed expectations: Watsco reported quarterly EPS of $4.00 versus the $4.41 consensus estimate, while revenue of $2.10 billion also fell short of expectations. Shares were down 1.6%, and the stock trades well below its 52-week high of $459.
• Estimates and sentiment are mixed: Zacks downgraded Watsco to “Strong Sell” and cut several 2027–2028 earnings forecasts, although some analysts see long-term upside from HVAC replacement demand tied to the A2L refrigerant transition. The company also pays a $3.30 quarterly dividend, representing a 4.1% yield.

Watsco, Inc. (NYSE:WSO - Get Free Report) has earned a consensus recommendation of "Hold" from the eleven research firms that are currently covering the firm, Marketbeat reports. One equities research analyst has rated the stock with a sell recommendation, eight have assigned a hold recommendation and two have issued a buy recommendation on the company. The average twelve-month price target among brokers that have issued ratings on the stock in the last year is $395.50.

A number of analysts have recently issued reports on the stock. Stephens restated an "overweight" rating and set a $485.00 price target on shares of Watsco in a report on Monday, August 17th. Robert W. Baird set a $400.00 price objective on Watsco in a research report on Thursday, July 30th. Morgan Stanley raised their target price on Watsco from $370.00 to $405.00 and gave the stock an "equal weight" rating in a research note on Friday, July 10th. Weiss Ratings reaffirmed a "hold (c)" rating on shares of Watsco in a research note on Tuesday. Finally, DA Davidson cut their price objective on Watsco from $385.00 to $330.00 and set a "neutral" rating for the company in a research report on Thursday, July 30th.

Watsco News Roundup

Here are the key news stories impacting Watsco this week:

• Positive Sentiment: Some analysts argue that Watsco may be undervalued based on its future cash-flow potential and could benefit from the industry’s transition to A2L refrigerants, which may support demand for replacement HVAC equipment. Watsco Stock Appears Undervalued Based on Future Cash Flow Watsco Could Be 14% Undervalued on Its A2L Transition Story
• Positive Sentiment: Zacks Research slightly increased its second-quarter 2028 EPS estimate to $5.09 from $5.06, while forecasting fiscal 2028 EPS of $15.15. The modest upgrade provides a limited indication of longer-term earnings potential.
• Neutral Sentiment: A separate industrial-distribution article highlighted competitive advantages among specialized distributors, a theme that may support Watsco’s long-term positioning but did not announce a company-specific development. Five Industrial Distributors With a Competitive Advantage
• Negative Sentiment: Zacks Research downgraded Watsco from “Hold” to “Strong Sell,” creating the clearest near-term bearish catalyst for WSO.
• Negative Sentiment: Zacks reduced its fiscal 2027 EPS forecast to $13.26 from $13.53, lowered second- and third-quarter estimates to $4.58, and cut fourth-quarter EPS to $2.16 from $2.33. Fiscal 2028 EPS was also trimmed to $15.15 from $15.26, suggesting weaker expected earnings momentum despite the small Q2 2028 increase.

Watsco Stock Down 1.6%

Shares of WSO opened at $320.08 on Friday. Watsco has a 52-week low of $295.75 and a 52-week high of $459.00. The stock has a fifty day simple moving average of $323.31 and a two-hundred day simple moving average of $368.93. The company has a market capitalization of $13.20 billion, a PE ratio of 27.76 and a beta of 1.05.

Watsco (NYSE:WSO - Get Free Report) last announced its quarterly earnings data on Wednesday, July 29th. The construction company reported $4.00 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $4.41 by ($0.41). The firm had revenue of $2.10 billion during 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 company posted $4.52 EPS. As a group, equities analysts anticipate that Watsco will post 12.21 earnings per share for the current fiscal year.

Watsco Dividend Announcement

The business also recently declared a quarterly dividend, which was paid on Friday, July 31st. Stockholders of record on Thursday, July 16th were paid a $3.30 dividend. This represents a $13.20 dividend on an annualized basis and a dividend yield of 4.1%. The ex-dividend date of this dividend was Thursday, July 16th. Watsco's payout ratio is 114.48%.

Hedge Funds Weigh In On Watsco

A number of hedge funds and other institutional investors have recently bought and sold shares of WSO. QRG Capital Management Inc. boosted its position in Watsco by 8.8% in the 2nd quarter. QRG Capital Management Inc. now owns 1,188 shares of the construction company's stock valued at $495,000 after buying an additional 96 shares during the period. Van Hulzen Asset Management LLC purchased a new position in Watsco in the second quarter valued at $250,000. Integrated Wealth Concepts LLC increased its holdings in Watsco by 10.8% during the 2nd quarter. Integrated Wealth Concepts LLC now owns 1,676 shares of the construction company's stock worth $698,000 after purchasing an additional 163 shares during the period. RFG Advisory LLC raised its position in Watsco by 3.9% in the 2nd quarter. RFG Advisory LLC now owns 6,006 shares of the construction company's stock valued at $2,503,000 after purchasing an additional 228 shares in the last quarter. Finally, NewEdge Advisors LLC lifted its stake in Watsco by 102.9% in the second quarter. NewEdge Advisors LLC now owns 1,536 shares of the construction company's stock worth $640,000 after acquiring an additional 779 shares during the last quarter. 89.71% of the stock is currently owned by hedge funds and other institutional investors.

About Watsco

Watsco, Inc is a distributor of heating, ventilation, air conditioning and refrigeration (HVAC/R) equipment and related products. The company supplies residential and commercial contractors with air conditioners, furnaces, heat pumps, refrigeration systems, ductwork, thermostats, controls, tools, replacement parts and other installation supplies.

Through its distribution network and digital sales platforms, Watsco serves HVAC/R contractors, dealers and other customers primarily across the United States, as well as in Canada and Puerto Rico.

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