Watsco's revenue trajectory has staged a V-shaped recovery, swinging from a 10.0% contraction in 2025Q4 to 7.4% growth in 2026Q3, suggesting the HVAC distribution demand trough may be forming.
Price trend, volume and key moving averages
Start with the evidence for owning the stock and the risks that can break the thesis.
Revenue growth has recovered to 7.4% in 2026Q3 from a 10.0% trough in 2025Q4, but gross margin compression to 26.4% has left operating margin at 10.1% versus the 13.2% peak seen in 2025Q2, evidencing the fixed SG&A base's amplification of margin swings.
Watsco operates over 670 locations across the US, Canada, Mexico, and the Caribbean, providing a broad market reach and resilience against regional economic fluctuations.
As the largest distributor of HVAC/R equipment, Watsco holds a dominant position in the industry, supported by a 60-year legacy and wide moat.
The Nahmad Family and Founder Entities hold 25% of Watsco, indicating significant insider confidence and long-term commitment to the company's growth.
Trailing total returns as of 11/8/2026, which may include dividends or other distributions. Benchmark is S&P 500 (^GSPC).
Check whether operating performance supports the current valuation.
Recent results and news deserve attention only when they alter the forward view.
| Quarter | EPS (Act vs Est) | Revenue (Act vs Est) |
|---|---|---|
Q4 2026Latest Oct 27, 2026 | $3.77-8.0% vs $4.10 | $2.2B+0.6% vs $2.2B |
Q3 2026 Jul 29, 2026 | $4.00-9.3% vs $4.41 | $2.1B-1.8% vs $2.1B |
Q2 2026 Apr 28, 2026 | $1.87+8.1% vs $1.73 | $1.5B+3.1% vs $1.5B |
Q1 2026 Feb 17, 2026 | $1.68-10.6% vs $1.88 | $1.6B-2.4% vs $1.6B |
Watsco remains overvalued with a 26x PE despite only 3% revenue growth in 2026. Recent earnings showed declining margins and EPS, raising concerns about structural weakness. Dividend payout now exceeds TTM EPS, posing a long-term risk to growth investment capacity.
Microsoft Corporation was the portfolio's top contributor during the quarter. Suncor Energy outperformed the Index during the quarter. KLA Corporation traded lower during the quarter.
Watsco, Inc. ( WSO ) Q3 2026 Earnings Call October 27, 2026 10:00 AM EDT Company Participants Albert Nahmad - Chairman & CEO Aaron Nahmad - Co-Vice Chairman & President Barry S. Logan - Executive VP of Planning & Strategy, Secretary and Director Rick Gomez - Vice President of Corporate Development Paul Johnston - Executive Vice President Conference Call Participants Thomas Moll - Stephens Inc., Research Division David Manthey - Robert W.
Although the revenue and EPS for Watsco (WSO) give a sense of how its business performed in the quarter ended September 2026, it might be worth considering how some key metrics compare with Wall Street estimates and the year-ago numbers.
Benchmark WSO against direct peers instead of judging its metrics in isolation.
Key metrics vs top competitors for Watsco, Inc. (WSO)
| Company | Price | Market Cap | P/E Ratio | Rev Growth (1Y) | Net Margin | ROE | Div Yield |
|---|---|---|---|---|---|---|---|
| $304.34 | $12.54B | 24.99 | -4.98% | 6.31% | 13.97% | 4.11% | |
| $1440.70 | $68.02B | 31.37 | 4.51% | 11.17% | 48.78% | 0.68% | |
| $113.27 | $6.33B | 28.49 | 6.37% | 5.55% | 15.86% | 3.06% | |
| $52.99 | $60.81B | 42.97 | 8.67% | 15.62% | 35.13% | 1.65% | |
| $220.06 | $5.93B | 24.75 | 1% | 7.87% | 34.75% | 1.47% | |
| $62.54 | $6.73B | 165.80 | -7.38% | 0.28% | 0.99% | — |
Watsco, Inc. (WSO) vs competitors — business, growth, and fundamentals comparison against the closest industry rivals.
Verify the primary filings, follow material updates, and answer the remaining questions.
Watsco, Inc. (WSO) SEC filings — annual & quarterly reports (10-K, 10-Q)
Oct 27, 2026·SEC
Oct 27, 2026·SEC
Oct 14, 2026·SEC
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Watsco, Inc. (WSO) stock FAQ — growth, dividends, profitability & financials explained
Watsco, Inc. (WSO) reported $7.44B in revenue over the trailing twelve months. Revenue was $7.24B in fiscal year 2025. That is 1602% more than the $425.4M of fiscal year 1996.
Watsco, Inc. (WSO) grew revenue by 0.3% over the trailing twelve months, compared with the twelve months before.
Yes. Watsco, Inc. (WSO) earned $469.5M in net income over the trailing twelve months (a 6.3% net margin).
Yes. Watsco, Inc. (WSO) pays a dividend that yields 4.11% at the current price, a high yield.
Watsco, Inc. (WSO) had a return on equity (ROE) of 14.0% over the trailing twelve months. That is in line with the market's typical 10-15%.
Watsco, Inc. (WSO) generated $667.0M in free cash flow over the trailing twelve months.
