Watsco (NYSE:WSO) Reaches New 12-Month Low After Earnings Miss

Key Points

• Watsco shares fell 15% to a new 52-week low after the company reported quarterly EPS of $4.00, below the $4.41 analyst consensus, while revenue of $2.10 billion also missed estimates.
• Revenue still increased 2.1% year over year, but earnings declined from $4.52 per share in the prior-year quarter. The company declared a $3.30 quarterly dividend, representing a 4.2% yield, though its payout ratio is elevated at 109.54%.
• Analyst sentiment remains cautious, with a consensus “Hold” rating and an average price target of $404.88; institutional investors own approximately 89.71% of Watsco’s shares.

Shares of Watsco, Inc. (NYSE:WSO - Get Free Report) reached a new 52-week low during mid-day trading on Wednesday following a dissappointing earnings announcement. The company traded as low as $312.42 and last traded at $324.6940, with a volume of 143433 shares traded. The stock had previously closed at $367.51.

The construction company reported $4.00 EPS for the quarter, missing analysts' consensus estimates of $4.41 by ($0.41). Watsco had a return on equity of 15.31% and a net margin of 6.85%.The business had revenue of $2.10 billion for the quarter, compared to analyst estimates of $2.14 billion. During the same quarter in the previous year, the business posted $4.52 earnings per share. The company's revenue was up 2.1% compared to the same quarter last year.

Watsco Dividend Announcement

The business also recently declared a quarterly dividend, which will be paid on Friday, July 31st. Investors of record on Thursday, July 16th will be issued a dividend of $3.30 per share. This represents a $13.20 annualized dividend and a dividend yield of 4.2%. The ex-dividend date is Thursday, July 16th. Watsco's dividend payout ratio (DPR) is currently 109.54%.

Analyst Upgrades and Downgrades

Several research firms have weighed in on WSO. Robert W. Baird dropped their price objective on shares of Watsco from $460.00 to $420.00 and set an "outperform" rating on the stock in a research note on Tuesday. Morgan Stanley lifted their target price on shares of Watsco from $370.00 to $405.00 and gave the company an "equal weight" rating in a research note on Friday, July 10th. Wall Street Zen upgraded shares of Watsco from a "sell" rating to a "hold" rating in a report on Saturday, May 2nd. Stephens upped their price target on shares of Watsco from $475.00 to $485.00 and gave the stock an "overweight" rating in a research note on Wednesday, April 29th. Finally, Weiss Ratings reiterated a "hold (c)" rating on shares of Watsco in a report on Friday, June 26th. Two investment analysts have rated the stock with a Buy rating and nine have assigned a Hold rating to the company's stock. According to MarketBeat, the stock currently has a consensus rating of "Hold" and a consensus target price of $404.88.

Institutional Investors Weigh In On Watsco

Several institutional investors and hedge funds have recently modified their holdings of WSO. Torren Management LLC bought a new position in Watsco during the fourth quarter valued at about $26,000. Bayban acquired a new position in shares of Watsco during the 4th quarter valued at about $29,000. Bamco Inc. NY acquired a new position in shares of Watsco during the 4th quarter valued at about $35,000. Laurel Wealth Advisors LLC bought a new position in shares of Watsco in the 4th quarter valued at approximately $37,000. Finally, Quarry LP acquired a new stake in Watsco in the 4th quarter worth approximately $37,000. Institutional investors and hedge funds own 89.71% of the company's stock.

Watsco Trading Down 15.0%

The stock has a market capitalization of $12.71 billion, a price-to-earnings ratio of 25.94 and a beta of 1.02. The company has a fifty day moving average of $383.45 and a two-hundred day moving average of $393.67.

About Watsco

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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