Watsco Stock Gets Stronger EPS Forecast from Zacks Research

Key Points

• Zacks Research raised Watsco’s Q3 2027 EPS estimate to $4.59 from $4.58 and projects FY2027 EPS of $13.28 and FY2028 EPS of $15.20, while maintaining a “Hold” rating.
• Watsco’s latest quarter fell short of expectations, with EPS of $4.00 versus the $4.41 consensus and revenue of $2.10 billion versus $2.14 billion, despite 2.1% year-over-year revenue growth.
• Analyst sentiment remains cautious: the stock has a consensus “Hold” rating, several firms recently cut price targets, and shares offer a quarterly dividend of $3.30, equivalent to a 4.1% annualized yield.

Watsco, Inc. (NYSE:WSO - Free Report) - Zacks Research upped their Q3 2027 earnings estimates for Watsco in a report released on Thursday, October 22nd. Zacks Research analyst Team now anticipates that the construction company will post earnings per share of $4.59 for the quarter, up from their prior estimate of $4.58. Zacks Research currently has a "Hold" rating on the stock. The consensus estimate for Watsco's current full-year earnings is $12.19 per share. Zacks Research also issued estimates for Watsco's FY2027 earnings at $13.28 EPS, Q3 2028 earnings at $5.22 EPS and FY2028 earnings at $15.20 EPS.

Watsco (NYSE:WSO - Get Free Report) last posted its quarterly earnings results 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). Watsco had a return on equity of 14.40% and a net margin of 6.53%. The business had revenue of $2.10 billion for the quarter, compared to analysts' expectations of $2.14 billion. During the same period in the prior year, the business posted $4.52 earnings per share. The business's quarterly revenue was up 2.1% compared to the same quarter last year.

WSO has been the subject of several other research reports. Mizuho cut their price target on Watsco from $350.00 to $325.00 and set a "neutral" rating for the company in a report on Thursday, October 15th. Morgan Stanley reduced their target price on shares of Watsco from $370.00 to $330.00 and set an "equal weight" rating on the stock in a report on Monday, October 12th. DA Davidson lowered their target price on shares of Watsco from $385.00 to $330.00 and set a "neutral" rating for the company in a report on Thursday, July 30th. Weiss Ratings downgraded shares of Watsco from a "hold (c)" rating to a "hold (c-)" rating in a research note on Tuesday, October 6th. Finally, Robert W. Baird set a $400.00 target price on Watsco in a research report on Thursday, July 30th. Two equities research analysts have rated the stock with a Buy rating and eight have issued a Hold rating to the company's stock. According to data from MarketBeat, Watsco presently has a consensus rating of "Hold" and an average price target of $373.62.

Watsco Stock Down 0.1%

Shares of NYSE WSO opened at $322.78 on Monday. The firm has a market cap of $13.31 billion, a price-to-earnings ratio of 27.99 and a beta of 1.06. The company's 50-day simple moving average is $307.19 and its 200-day simple moving average is $358.30. Watsco has a 52-week low of $277.34 and a 52-week high of $459.00.

Watsco Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Friday, October 30th. Shareholders of record on Friday, October 16th will be issued a $3.30 dividend. The ex-dividend date is Friday, October 16th. This represents a $13.20 dividend on an annualized basis and a yield of 4.1%. Watsco's payout ratio is currently 114.48%.

Institutional Trading of Watsco

Institutional investors have recently added to or reduced their stakes in the business. Markel Group Inc. grew its stake in shares of Watsco by 0.8% in the first quarter. Markel Group Inc. now owns 582,169 shares of the construction company's stock worth $211,787,000 after purchasing an additional 4,500 shares in the last quarter. Bank of America Corp DE purchased a new position in Watsco in the second quarter valued at about $119,291,000. Bank of New York Mellon Corp bought a new position in Watsco during the second quarter valued at about $97,937,000. Confluence Investment Management LLC bought a new stake in shares of Watsco during the 3rd quarter worth $96,991,000. Finally, Caledonia Investments PLC lifted its holdings in shares of Watsco by 12.2% during the third quarter. Caledonia Investments PLC now owns 261,439 shares of the construction company's stock worth $79,072,000 after buying an additional 28,512 shares during the last quarter. Institutional investors own 89.71% of the company's stock.

Watsco News Roundup

Here are the key news stories impacting Watsco this week:

• Positive Sentiment: Shares recently rallied on above-average volume after earnings-estimate revisions suggested potential for further strength. The move was also supported by optimism surrounding Watsco’s completed acquisition of The Granite Group, which adds approximately $500 million in revenue and expands its Northeast HVAC and plumbing distribution footprint. Watsco shares rally on earnings estimate revisions Watsco rises as investors weigh Granite deal
• Positive Sentiment: Zacks Research raised its Q1 2027 EPS estimate to $1.94 from $1.93 and its Q1 2028 estimate to $2.07 from $2.05, indicating modestly improved expectations for future profitability. Watsco earnings estimate revisions
• Positive Sentiment: Zacks Research upgraded Watsco from “strong sell” to “hold.” While not a bullish rating, the change reduces an important source of negative sentiment. The company also secured a new $750 million unsecured revolving credit facility, providing financial flexibility for operations, acquisitions and other capital needs. Zacks Research rating change Watsco completes $750 million credit facility
• Neutral Sentiment: Investors are positioning ahead of Watsco’s October 27 third-quarter earnings call, where updates on Granite integration, demand and margins could determine whether the recent rally continues.
• Negative Sentiment: The consensus price target was reduced 11.78% to $351.37. Although it remains above the recent trading level, the cut signals less upside expected by analysts. Watsco consensus price target reduced
• Negative Sentiment: Watsco’s latest reported quarter fell short of expectations, with EPS of $4.00 versus the $4.41 consensus and revenue of $2.10 billion versus $2.14 billion, keeping execution and margin performance key risks.

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.

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