Watsco (NYSE:WSO) Releases Earnings Results, Beats Expectations By $0.14 EPS

Key Points

• Watsco beat Q1 estimates with $1.87 EPS versus $1.73 expected and revenue of $1.53B, but EPS fell year‑over‑year and gross margin dipped slightly, contributing to a ~3.7% stock decline.
• The company agreed to acquire Jackson Supply (about $230M in annual sales) adding 25 Sunbelt locations, while digital initiatives accelerated—e‑commerce +16% and OnCall Air contractor sales +20%—with OnCall Air GMV expected to exceed $2B this year.
• Watsco raised its quarterly dividend to $3.30 (annualized $13.20, ~3.0% yield), remains debt‑free, and is investing in pricing optimization and AI to drive efficiency and reach a long‑term 30% gross margin target.

Watsco (NYSE:WSO - Get Free Report) posted its quarterly earnings data on Tuesday. The construction company reported $1.87 EPS for the quarter, topping the consensus estimate of $1.73 by $0.14, FiscalAI reports. Watsco had a return on equity of 15.49% and a net margin of 6.87%.The firm had revenue of $1.53 billion during the quarter, compared to analyst estimates of $1.48 billion. During the same period in the prior year, the business posted $1.93 EPS. Watsco's revenue was up .1% on a year-over-year basis.

Here are the key takeaways from Watsco's conference call:

• Announced acquisition of Jackson Supply (about $230 million in annual sales) adding 25 Sunbelt locations with existing management staying on and expected to close in Q2, aimed at expanding geographic reach and product diversification.
• E‑commerce grew 16% in the quarter and OnCall Air boosted contractor customer sales by 20%; management expects OnCall Air gross merchandise value to exceed $2 billion this year, underscoring digital acceleration.
• Management says the A2L product transition has matured and market stability is improving—unit volumes stabilized with March exiting at high single‑digit growth and April momentum continuing—while remaining cautiously optimistic into the selling season.
• Financials showed gross margins largely intact and SG&A flat, the company remains debt‑free, and leadership is investing in pricing optimization, AI, and other technologies to drive efficiency and reach a long‑term 30% gross margin target.

Watsco Stock Down 3.7%

WSO opened at $439.99 on Wednesday. The stock has a market cap of $17.86 billion, a P/E ratio of 36.33 and a beta of 1.06. Watsco has a 52-week low of $323.05 and a 52-week high of $496.25. The business has a fifty day moving average of $397.51 and a 200 day moving average of $376.15.

Watsco Increases Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, April 30th. Shareholders of record on Thursday, April 16th will be paid a $3.30 dividend. The ex-dividend date of this dividend is Thursday, April 16th. This is an increase from Watsco's previous quarterly dividend of $3.00. This represents a $13.20 annualized dividend and a yield of 3.0%. Watsco's payout ratio is 109.00%.

Trending Headlines about Watsco

Here are the key news stories impacting Watsco this week:

• Positive Sentiment: Signed definitive agreement to acquire Jackson Supply Company (about $230M of annual sales) to add scale in core Sunbelt markets and advance Watsco’s buy‑and‑build strategy — a clear strategic growth move. Watsco To Acquire Jackson Supply Company
• Positive Sentiment: Q1 results beat consensus: EPS $1.87 vs. ~$1.70 estimate and revenue $1.53B vs. ~$1.48B; company also raised its dividend — supports cash-return thesis and long‑term shareholder value. Watsco (WSO) Q1 Earnings and Revenues Surpass Estimates
• Neutral Sentiment: Management emphasized a “digital push” and technology adoption on the earnings call, describing cautious optimism about longer‑term efficiency gains — positive strategically but not an immediate earnings fix. Watsco Earnings Call: Digital Push Drives Cautious Optimism
• Negative Sentiment: Underlying profitability showed pressure: gross margin dipped slightly (~27.9% vs. 28.1% a year ago), operating income declined ~2% (~$110M) and EPS fell year‑over‑year — factors that likely drove the selloff despite the beat. Watsco shares slide as Q1 results show slight margin and EPS pressure despite flat revenue
• Negative Sentiment: Sales mix was uneven: U.S. sales rose modestly (~+2%) while international sales fell (~-11%), HVAC equipment volumes were down ~1% — sign that seasonal demand and geographic exposure remain risks near term. Watsco, Inc. (WSO) Q1 2026 Earnings Call Transcript

Institutional Investors Weigh In On Watsco

Several hedge funds have recently made changes to their positions in the company. Bamco Inc. NY bought a new position in shares of Watsco during the fourth quarter valued at approximately $35,000. Quarry LP acquired a new position in Watsco during the 4th quarter valued at about $37,000. Resources Management Corp CT ADV raised its position in shares of Watsco by 150.0% in the 4th quarter. Resources Management Corp CT ADV now owns 125 shares of the construction company's stock valued at $42,000 after purchasing an additional 75 shares during the last quarter. Los Angeles Capital Management LLC purchased a new position in shares of Watsco in the fourth quarter worth $59,000. Finally, Headlands Technologies LLC acquired a new stake in Watsco during the 2nd quarter worth about $121,000. 89.71% of the stock is currently owned by hedge funds and other institutional investors.

Wall Street Analysts Forecast Growth

WSO has been the topic of several research analyst reports. Mizuho set a $425.00 price objective on Watsco in a research report on Wednesday, February 18th. JPMorgan Chase & Co. increased their target price on Watsco from $370.00 to $400.00 and gave the stock a "neutral" rating in a research report on Thursday, February 19th. Morgan Stanley decreased their target price on Watsco from $460.00 to $370.00 and set an "equal weight" rating on the stock in a research note on Wednesday, January 14th. UBS Group started coverage on Watsco in a report on Monday, January 5th. They issued a "neutral" rating and a $370.00 price target on the stock. Finally, Zacks Research upgraded Watsco from a "strong sell" rating to a "hold" rating in a research note on Wednesday, February 25th. Eight investment analysts have rated the stock with a Hold rating, According to MarketBeat.com, the stock has an average rating of "Hold" and a consensus target price of $382.80.

Watsco Company 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.