Zacks Research Has Pessimistic View of Watsco Q3 Earnings

Key Points

• Zacks Research lowered its Q3 2028 EPS estimate for Watsco to $5.20 from $5.24 and maintains a “Strong Sell” rating. The company’s latest quarter also missed estimates, reporting $4.00 EPS versus the $4.41 consensus.
• Analyst sentiment is mixed, with Watsco carrying a consensus “Hold” rating and an average price target of $395.50, while shares recently opened at $301.36—near their 52-week low.
• Watsco declared a quarterly dividend of $3.30 per share, or $13.20 annualized, representing a 4.4% yield; however, its payout ratio is elevated at 114.48%.

Watsco, Inc. (NYSE:WSO - Free Report) - Investment analysts at Zacks Research dropped their Q3 2028 earnings estimates for shares of Watsco in a report released on Wednesday, September 23rd. Zacks Research analyst Team now anticipates that the construction company will earn $5.20 per share for the quarter, down from their prior forecast of $5.24. Zacks Research has a "Strong Sell" rating on the stock. The consensus estimate for Watsco's current full-year earnings is $12.21 per share.

Watsco (NYSE:WSO - Get Free Report) last posted its earnings results on Wednesday, July 29th. The construction company reported $4.00 earnings per share 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 firm had revenue of $2.10 billion for the quarter, compared to analysts' expectations of $2.14 billion. During the same quarter in the prior year, the company posted $4.52 earnings per share. The business's revenue for the quarter was up 2.1% on a year-over-year basis.

Other research analysts have also issued reports about the stock. Weiss Ratings restated a "hold (c)" rating on shares of Watsco in a report on Tuesday, September 22nd. Morgan Stanley increased their price target on shares of Watsco from $370.00 to $405.00 and gave the stock an "equal weight" rating in a research note on Friday, July 10th. DA Davidson lowered their price objective 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. Stephens reaffirmed an "overweight" rating and set a $485.00 price objective on shares of Watsco in a research report on Monday, August 17th. Finally, Robert W. Baird set a $400.00 target price on Watsco in a report on Thursday, July 30th. Two research analysts have rated the stock with a Buy rating, eight have given a Hold rating and one has issued a Sell rating to the company's stock. According to MarketBeat.com, Watsco presently has a consensus rating of "Hold" and a consensus target price of $395.50.

Watsco Stock Performance

NYSE WSO opened at $301.36 on Friday. Watsco has a fifty-two week low of $295.75 and a fifty-two week high of $459.00. The stock has a 50 day simple moving average of $317.27 and a two-hundred day simple moving average of $366.51. The stock has a market cap of $12.43 billion, a P/E ratio of 26.14 and a beta of 1.06.

Watsco Announces Dividend

The business also recently disclosed 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 4.4%. Watsco's payout ratio is presently 114.48%.

Hedge Funds Weigh In On Watsco

Several institutional investors and hedge funds have recently modified their holdings of the stock. Confluence Investment Management LLC bought a new stake in Watsco during the 3rd quarter valued at about $96,991,000. QRG Capital Management Inc. raised its holdings in Watsco by 8.8% in the second quarter. QRG Capital Management Inc. now owns 1,188 shares of the construction company's stock worth $495,000 after buying an additional 96 shares during the last quarter. Van Hulzen Asset Management LLC bought a new position in shares of Watsco in the second quarter worth approximately $250,000. Integrated Wealth Concepts LLC grew its holdings in shares of Watsco by 10.8% during the second quarter. Integrated Wealth Concepts LLC now owns 1,676 shares of the construction company's stock valued at $698,000 after buying an additional 163 shares during the last quarter. Finally, RFG Advisory LLC grew its holdings in shares of Watsco by 3.9% during the second quarter. RFG Advisory LLC now owns 6,006 shares of the construction company's stock valued at $2,503,000 after buying an additional 228 shares during the last quarter. 89.71% of the stock is currently owned by institutional investors.

About Watsco

Watsco, Inc NYSE: WSO is a distributor of heating, air conditioning and refrigeration equipment and related products. The company supplies residential and commercial contractors with air conditioners, heat pumps, furnaces, refrigeration systems, indoor air-quality products, controls, replacement parts and other installation supplies.

Watsco serves the replacement and new-construction markets through a network of distribution centers, branches, showrooms and e-commerce platforms. Its customers primarily include HVAC and refrigeration contractors, dealers and other industry professionals, while its products are sourced from major manufacturers and distributed under leading industry brands.

Founded in 1956, Watsco has expanded through organic growth and acquisitions to become one of the largest HVAC and refrigeration distributors in North America.

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