Dearborn Partners LLC Purchases New Stake in Watsco, Inc. $WSO

Key Points

• Dearborn Partners acquired 89,590 Watsco shares worth approximately $32.6 million, representing 0.22% of the company and about 1.7% of the fund’s portfolio. Institutional investors collectively own 89.71% of Watsco.
• Watsco reported quarterly EPS of $4.00, missing the $4.41 consensus estimate, while revenue reached $2.10 billion, up 2.1% year over year but below expectations. The stock opened at $310.64, near its 52-week low of $300.66.
• The company paid a quarterly dividend of $3.30, equivalent to a $13.20 annualized payout and a 4.2% yield. Analysts maintain a consensus “Hold” rating with an average price target of $395.50.

Dearborn Partners LLC acquired a new position in Watsco, Inc. (NYSE:WSO - Free Report) during the 2nd quarter, according to the company in its most recent disclosure with the Securities & Exchange Commission. The fund acquired 89,590 shares of the construction company's stock, valued at approximately $32,592,000. Watsco accounts for about 1.7% of Dearborn Partners LLC's portfolio, making the stock its 14th largest position. Dearborn Partners LLC owned 0.22% of Watsco as of its most recent filing with the Securities & Exchange Commission.

Other institutional investors have also added to or reduced their stakes in the company. CWM LLC lifted its position in shares of Watsco by 3.8% during the fourth quarter. CWM LLC now owns 710 shares of the construction company's stock worth $239,000 after acquiring an additional 26 shares in the last quarter. Assetmark Inc. lifted its holdings in shares of Watsco by 2.7% during the first quarter. Assetmark Inc. now owns 1,115 shares of the construction company's stock valued at $406,000 after purchasing an additional 29 shares in the last quarter. Northwestern Mutual Investment Management Company LLC boosted its holdings in shares of Watsco by 0.4% during the 4th quarter. Northwestern Mutual Investment Management Company LLC now owns 7,814 shares of the construction company's stock valued at $2,633,000 after acquiring an additional 34 shares during the last quarter. Modern Wealth Management LLC grew its stake in shares of Watsco by 5.2% in the second quarter. Modern Wealth Management LLC now owns 783 shares of the construction company's stock worth $346,000 after acquiring an additional 39 shares during the period. Finally, Bessemer Group Inc. increased its position in Watsco by 10.5% during the first quarter. Bessemer Group Inc. now owns 496 shares of the construction company's stock valued at $181,000 after acquiring an additional 47 shares during the last quarter. 89.71% of the stock is owned by hedge funds and other institutional investors.

Watsco Stock Performance

WSO opened at $310.64 on Tuesday. Watsco, Inc. has a fifty-two week low of $300.66 and a fifty-two week high of $459.00. The firm's fifty day moving average is $361.71 and its 200 day moving average is $385.15. The stock has a market cap of $12.81 billion, a price-to-earnings ratio of 26.94 and a beta of 1.05.

Watsco (NYSE:WSO - Get Free Report) last issued 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). The business had revenue of $2.10 billion during the quarter, compared to analysts' expectations of $2.14 billion. Watsco had a return on equity of 14.40% and a net margin of 6.53%.The company's quarterly revenue was up 2.1% on a year-over-year basis. During the same quarter in the previous year, the company posted $4.52 EPS. On average, equities research analysts predict that Watsco, Inc. will post 12.21 earnings per share for the current year.

Watsco Announces Dividend

The business also recently announced a quarterly dividend, which was paid on Friday, July 31st. Stockholders of record on Thursday, July 16th were issued a $3.30 dividend. This represents a $13.20 annualized dividend and a dividend yield of 4.2%. The ex-dividend date of this dividend was Thursday, July 16th. Watsco's payout ratio is 114.48%.

Analyst Upgrades and Downgrades

Several research analysts have weighed in on WSO shares. DA Davidson decreased their price target on shares of Watsco from $385.00 to $330.00 and set a "neutral" rating on the stock in a research report on Thursday, July 30th. Weiss Ratings reissued a "hold (c)" rating on shares of Watsco in a research report on Friday, June 26th. Stephens restated an "overweight" rating and issued a $485.00 price objective on shares of Watsco in a research note on Monday, August 17th. Wall Street Zen raised Watsco from a "sell" rating to a "hold" rating in a report on Saturday, May 2nd. Finally, Robert W. Baird set a $400.00 price target on Watsco in a report on Thursday, July 30th. Two equities research analysts have rated the stock with a Buy rating and nine have assigned a Hold rating to the company's stock. Based on data from MarketBeat.com, the company presently has a consensus rating of "Hold" and a consensus price target of $395.50.

Watsco Profile

Watsco, Inc is the largest distributor of heating, ventilation, air conditioning and refrigeration (HVAC/R) equipment, parts and supplies in the United States. Headquartered in Miami, Florida, the company operates a network of more than 600 branches across the continental U.S., Canada and Puerto Rico. Watsco serves residential and commercial contractors by providing essential components for climate control systems, including air conditioners, furnaces, heat pumps, coils, refrigerants, controls and electrical and piping supplies.

Founded in 1947, Watsco has grown from a single regional distributor into an industry leader through a combination of organic expansion, acquisitions and strategic partnerships with original equipment manufacturers such as Carrier, Trane, Goodman and Lennox.

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