Watsco (NYSE:WSO) Announces Earnings Results

Watsco (NYSE:WSO) announced its quarterly earnings results on Tuesday. The construction company reported $1.87 EPS for the quarter, topping analysts’ consensus estimates of $1.73 by $0.14, FiscalAI reports. The business had revenue of $1.53 billion for the quarter, compared to analysts’ expectations of $1.48 billion. Watsco had a return on equity of 15.49% and a net margin of 6.87%.The business’s quarterly revenue was up .1% on a year-over-year basis. During the same period in the previous year, the firm earned $1.93 EPS.

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 Trading Down 2.4%

Watsco stock opened at $428.04 on Thursday. The business’s fifty day simple moving average is $397.67 and its two-hundred day simple moving average is $376.51. Watsco has a 12 month low of $323.05 and a 12 month high of $496.25. The company has a market capitalization of $17.38 billion, a price-to-earnings ratio of 35.35 and a beta of 1.06.

Watsco Increases Dividend

The business also recently announced a quarterly dividend, which will be paid on Thursday, April 30th. Shareholders of record on Thursday, April 16th will be issued a $3.30 dividend. This represents a $13.20 annualized dividend and a yield of 3.1%. This is a positive change from Watsco’s previous quarterly dividend of $3.00. The ex-dividend date of this dividend is Thursday, April 16th. Watsco’s dividend payout ratio is presently 109.00%.

Wall Street Analysts Forecast Growth

Several research firms recently weighed in on WSO. Zacks Research upgraded Watsco from a “strong sell” rating to a “hold” rating in a research report on Wednesday, February 25th. Stephens lifted their price target on Watsco from $475.00 to $485.00 and gave the company an “overweight” rating in a research report on Wednesday. UBS Group began coverage on Watsco in a research report on Monday, January 5th. They set a “neutral” rating and a $370.00 price target on the stock. Mizuho set a $425.00 price target on Watsco in a research report on Wednesday, February 18th. Finally, JPMorgan Chase & Co. lifted their price target on Watsco from $370.00 to $400.00 and gave the company a “neutral” rating in a research report on Thursday, February 19th. One equities research analyst has rated the stock with a Buy rating and eight have assigned a Hold rating to the company. Based on data from MarketBeat.com, the stock presently has an average rating of “Hold” and a consensus price target of $399.83.

Institutional Investors Weigh In On Watsco

Several hedge funds have recently added to or reduced their stakes in WSO. Invesco Ltd. raised its stake in shares of Watsco by 6.6% in the fourth quarter. Invesco Ltd. now owns 78,336 shares of the construction company’s stock worth $26,395,000 after purchasing an additional 4,863 shares during the last quarter. Corient Private Wealth LLC raised its stake in shares of Watsco by 202.6% in the fourth quarter. Corient Private Wealth LLC now owns 472,182 shares of the construction company’s stock worth $159,102,000 after purchasing an additional 316,129 shares during the last quarter. Delta Global Management LP raised its stake in shares of Watsco by 12.0% in the fourth quarter. Delta Global Management LP now owns 7,177 shares of the construction company’s stock worth $2,418,000 after purchasing an additional 769 shares during the last quarter. Empowered Funds LLC raised its stake in shares of Watsco by 86.3% in the fourth quarter. Empowered Funds LLC now owns 1,867 shares of the construction company’s stock worth $629,000 after purchasing an additional 865 shares during the last quarter. Finally, Voloridge Investment Management LLC raised its stake in shares of Watsco by 89.5% in the fourth quarter. Voloridge Investment Management LLC now owns 120,497 shares of the construction company’s stock worth $40,601,000 after purchasing an additional 56,898 shares during the last quarter. 89.71% of the stock is owned by institutional investors.

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.