Watsco (NYSE:WSO) Stock Price Down 8.9% - Should You Sell?

Key Points

• Watsco shares fell 8.9% intraday to about $350.91 on Tuesday, with ~331,793 shares traded (down roughly 20% from average) after a prior close of $385.27.
• Quarterly results missed expectations: Watsco reported $1.68 EPS vs. $1.94 expected and $1.58B in revenue vs. $1.62B expected, with revenue down 9.9% year‑over‑year.
• Dividend and analyst view: Watsco pays a $3.00 quarterly dividend ($12.00 annual, 3.3% yield) with a 99% payout ratio, and Wall Street consensus is a "Hold" with an average target of $409.00.

Watsco, Inc. (NYSE:WSO - Get Free Report) dropped 8.9% during trading on Tuesday . The stock traded as low as $340.01 and last traded at $350.9070. Approximately 331,793 shares traded hands during mid-day trading, a decline of 20% from the average daily volume of 414,825 shares. The stock had previously closed at $385.27.

Wall Street Analysts Forecast Growth

WSO has been the topic of a number of analyst reports. Wolfe Research set a $349.00 price objective on shares of Watsco in a research report on Tuesday, December 9th. JPMorgan Chase & Co. increased their target price on shares of Watsco from $370.00 to $400.00 and gave the stock a "neutral" rating in a report on Thursday, February 19th. UBS Group assumed coverage on Watsco in a research note on Monday, January 5th. They issued a "neutral" rating and a $370.00 target price on the stock. Zacks Research raised Watsco from a "strong sell" rating to a "hold" rating in a research report on Wednesday, February 25th. Finally, KeyCorp reiterated a "sector weight" rating on shares of Watsco in a report on Friday, December 12th. One investment analyst has rated the stock with a Buy rating and eight have issued a Hold rating to the company's stock. Based on data from MarketBeat, the stock presently has a consensus rating of "Hold" and an average target price of $409.00.

Watsco Stock Performance

The company has a market capitalization of $14.57 billion, a P/E ratio of 29.79 and a beta of 1.03. The business's fifty day simple moving average is $395.82 and its 200-day simple moving average is $375.37.

Watsco (NYSE:WSO - Get Free Report) last released its quarterly earnings data on Tuesday, February 17th. The construction company reported $1.68 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $1.94 by ($0.26). The business had revenue of $1.58 billion for the quarter, compared to the consensus estimate of $1.62 billion. Watsco had a net margin of 6.87% and a return on equity of 15.49%. Watsco's revenue for the quarter was down 9.9% on a year-over-year basis. During the same quarter in the prior year, the business posted $2.37 earnings per share. As a group, analysts forecast that Watsco, Inc. will post 14.62 EPS for the current year.

Watsco Dividend Announcement

The company also recently declared a quarterly dividend, which was paid on Friday, January 30th. Stockholders of record on Friday, January 16th were issued a dividend of $3.00 per share. The ex-dividend date was Friday, January 16th. This represents a $12.00 dividend on an annualized basis and a dividend yield of 3.3%. Watsco's dividend payout ratio (DPR) is currently 99.09%.

Institutional Investors Weigh In On Watsco

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the business. Torren Management LLC acquired a new position in Watsco during the 4th quarter worth approximately $26,000. Bayban acquired a new stake in shares of Watsco in the fourth quarter worth approximately $29,000. SJS Investment Consulting Inc. increased its position in Watsco by 2,366.7% during the 3rd quarter. SJS Investment Consulting Inc. now owns 74 shares of the construction company's stock worth $30,000 after purchasing an additional 71 shares in the last quarter. TD Waterhouse Canada Inc. lifted its position in Watsco by 242.9% during the second quarter. TD Waterhouse Canada Inc. now owns 72 shares of the construction company's stock valued at $33,000 after buying an additional 51 shares in the last quarter. Finally, Bamco Inc. NY purchased a new position in shares of Watsco in the 4th quarter valued at $35,000. Institutional investors and hedge funds 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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