Watsco (NYSE:WSO) Shares Gap Down - Here's Why

Key Points

• Watsco shares gapped down at Monday’s open, falling from a prior close of $385.16 to an opening price of $371.47 and trading as low as about $365.94.
• Despite the dip, recent analyst commentary remains mixed but generally cautious: Watsco has a consensus Hold rating with an average target price of $402.71, while Stephens raised its target to $485 and Morgan Stanley lifted its target to $405.
• The company recently reported better-than-expected quarterly earnings of $1.87 per share on revenue of $1.53 billion, and it announced a quarterly dividend of $3.30 per share, equal to a 3.6% yield.

Watsco, Inc. (NYSE:WSO - Get Free Report) gapped down before the market opened on Monday . The stock had previously closed at $385.16, but opened at $371.47. Watsco shares last traded at $365.9390, with a volume of 13,257 shares traded.

Wall Street Analysts Forecast Growth

Several research analysts recently commented on the company. Stephens boosted their price target on Watsco from $475.00 to $485.00 and gave the stock an "overweight" rating in a research note on Wednesday, April 29th. Wall Street Zen upgraded Watsco from a "sell" rating to a "hold" rating in a research note on Saturday, May 2nd. Morgan Stanley lifted their price objective on Watsco from $370.00 to $405.00 and gave the stock an "equal weight" rating in a report on Friday, July 10th. DA Davidson assumed coverage on Watsco in a research report on Tuesday, June 16th. They issued a "neutral" rating and a $385.00 target price on the stock. Finally, Weiss Ratings reaffirmed a "hold (c)" rating on shares of Watsco in a research report on Friday, June 26th. One investment analyst has rated the stock with a Buy rating and nine have issued a Hold rating to the stock. According to MarketBeat.com, Watsco currently has a consensus rating of "Hold" and an average target price of $402.71.

Watsco Stock Performance

The company's fifty day simple moving average is $389.40 and its two-hundred day simple moving average is $392.71. The company has a market capitalization of $15.03 billion, a price-to-earnings ratio of 30.68 and a beta of 1.02.

Watsco (NYSE:WSO - Get Free Report) last issued its earnings results on Tuesday, April 28th. The construction company reported $1.87 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $1.73 by $0.14. Watsco had a net margin of 6.85% and a return on equity of 15.31%. The business had revenue of $1.53 billion for the quarter, compared to analyst estimates of $1.49 billion. During the same quarter in the prior year, the business posted $1.93 EPS. The company's revenue for the quarter was up .1% on a year-over-year basis. Sell-side analysts anticipate that Watsco, Inc. will post 12.81 EPS for the current year.

Watsco Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Friday, July 31st. Shareholders of record on Thursday, July 16th will be paid a dividend of $3.30 per share. The ex-dividend date is Thursday, July 16th. This represents a $13.20 annualized dividend and a yield of 3.6%. Watsco's dividend payout ratio is presently 109.54%.

Institutional Inflows and Outflows

A number of large investors have recently bought and sold shares of WSO. Capital International Investors increased its holdings in shares of Watsco by 103.1% in the 4th quarter. Capital International Investors now owns 4,642,893 shares of the construction company's stock valued at $1,564,423,000 after acquiring an additional 2,356,998 shares during the last quarter. Charles Schwab Investment Management Inc. lifted its stake in Watsco by 3.1% during the fourth quarter. Charles Schwab Investment Management Inc. now owns 1,559,965 shares of the construction company's stock worth $525,634,000 after purchasing an additional 46,799 shares during the last quarter. State Street Corp boosted its holdings in Watsco by 1.4% in the third quarter. State Street Corp now owns 1,238,121 shares of the construction company's stock worth $500,572,000 after purchasing an additional 16,595 shares during the period. Geode Capital Management LLC boosted its holdings in Watsco by 0.8% in the fourth quarter. Geode Capital Management LLC now owns 638,014 shares of the construction company's stock worth $214,373,000 after purchasing an additional 5,176 shares during the period. Finally, M&T Bank Corp increased its stake in Watsco by 60,779.4% during the fourth quarter. M&T Bank Corp now owns 599,662 shares of the construction company's stock valued at $202,056,000 after purchasing an additional 598,677 shares during the last quarter. Institutional investors own 89.71% of the company's stock.

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.

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