Upside case
Bull case
$539+34.3%
WSO would need investors to value it at roughly 43x earnings — about 11x more generous than today's 32x forward P/E. That requires meaningful multiple expansion on top of continued earnings growth.
Analysis OverviewHoldUpdated Jun 18, 2026
Watsco, Inc. (WSO) Stock Analysis
Wall Street verdict, consensus price target, and analyst rating breakdown — everything needed to frame the risk/reward at today's price.
Analyst consensus
Hold
Covering
26
analysts
8 bullish · 2 bearish · 26 covering WSO
Strong Buy
0
Buy
8
Hold
16
Sell
2
Strong Sell
0
Consensus Target
$407
+1.5% vs today
Scenario Range
$258 – $539
Model bear to bull value window
Coverage
26
Published analyst ratings
Valuation Context
31.6x
Forward P/E · Market cap $16.3B
WSO price targets
Three scenarios for where WSO stock could go
Current
~$401
Confidence
47 / 100
Updated
Jun 18, 2026
Where we are now
Current · $401
Bear
$258
Base
$409
Bull
$539
Market caseClosest to today
Base case
$409+2.0%
This is close to how the market is already pricing WSO — at roughly 32x forward earnings. No dramatic re-rating needed, just steady execution on the core business.
Stress case
Bear case
$258-35.8%
If investor confidence fades or macro conditions deteriorate, a 11x multiple contraction could push WSO down roughly 36% from where it trades now.
Not financial advice. Model confidence reflects internal scenario assumptions, not a guarantee of returns. Past performance does not predict future results.
Watsco, Inc.
WSO · NYSEIndustrialsIndustrial - DistributionDecember year-end
Watsco is the largest North American distributor of heating, ventilation, air conditioning, and refrigeration (HVAC/R) equipment and related parts. It generates revenue primarily through equipment sales (~60% of revenue) and parts/supplies sales (~40%), serving contractors and dealers in replacement and new construction markets. The company's competitive advantage lies in its extensive distribution network—over 670 locations—and deep relationships with contractors that create switching costs.
Market Cap
$16.3B
Revenue TTM
$7.2B
Net Income TTM
$496M
Net Margin
6.8%
WSO Revenue and Earnings Performance
Quarterly beat-or-miss track record against analyst estimates, plus forward revenue and EPS outlook for the next two fiscal years.
EPS Beat Rate
25%Exceptional
12 quarters tracked
Revenue Beat Rate
25%Exceptional
vs consensus estimates
Avg EPS Surprise
-5.6%
above Street consensus
Beat / Miss Record
BeatMissLeft = EPS · Right = Revenue
Q3 2025
Q4 2025
Q1 2026
Q2 2026
Last 4 Quarters
EPS beats: 1 of 4Q3 2025
EPS
$4.52/$4.78
Revenue
$2.1B/$2.2B
Q4 2025
EPS
$3.98/$4.44
Revenue
$2.1B/$2.2B
Q1 2026
EPS
$1.68/$1.88
Revenue
$1.6B/$1.6B
Q2 2026
EPS
$1.87/$1.73
Revenue
$1.5B/$1.5B
| Quarter | EPS (Actual / Est) | EPS Surprise | Revenue (Actual / Est) | Rev Surprise |
|---|---|---|---|---|
| Q3 2025 | $4.52/$4.78 | -5.4% | $2.1B/$2.2B | -7.3% |
| Q4 2025 | $3.98/$4.44 | -10.4% | $2.1B/$2.2B | -4.5% |
| Q1 2026 | $1.68/$1.88 | -10.6% | $1.6B/$1.6B | -2.4% |
| Q2 2026 | $1.87/$1.73 | +8.1% | $1.5B/$1.5B | +3.1% |
FY1–FY2 Estimates
Revenue Outlook
FY1
$7.5B
+3.7% YoY
FY2
$7.8B
+4.3% YoY
EPS Outlook
FY1
$12.61
-3.5% YoY
FY2
$13.17
+4.4% YoY
Trailing FCF (TTM)$702M
FCF Margin: 9.7%
Next Earnings
July 29, 2026
Expected EPS
$4.36
Expected Revenue
$2.1B
WSO beat EPS estimates in 1 of 4 tracked quarters. Mixed delivery makes the upcoming report a key data point for re-rating.
WSO Revenue Breakdown by Segment
Product and geographic revenue mix from the latest annual disclosure, with year-over-year growth by segment.
Latest disclosure
FY 2024
Total disclosed revenue $7.6B
Product Mix
Latest annual revenue by segment or product family
Segment breakdown not available for this company.
Geographic Mix
Latest annual revenue by reported region
UNITED STATES
90.1%
+4.9% YoY
Tap, hover, or focus a slice to inspect segment detail.
UNITED STATES is the largest reported region at 90.1%, up 4.9% YoY.
WSO Valuation Snapshot
Current multiples compared to the S&P 500, the company's sector, and its own five-year average.
Relative Value Signal
Slightly cheap versus peers
Fair value est. $471 — implies +17.4% from today's price.
Upside to Fair Value
17.4%
potential upside
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
WSO
32.7x
vs
S&P 500
24.4x
+34% premium
vs Industrials Trailing P/E
WSO
32.7x
vs
Industrials
25.6x
+28% premium
vs WSO 5Y Avg P/E
Today
32.7x
vs
5Y Average
27.9x
+17% premium
Forward PE
31.6x
S&P 500
18.8x
+68%
Industrials
21.2x
+49%
5Y Avg
—
—
Trailing PE
32.7x
S&P 500
24.4x
+34%
Industrials
25.6x
+28%
5Y Avg
27.9x
+17%
PEG Ratio
2.77x
S&P 500
1.66x
+67%
Industrials
1.65x
+68%
5Y Avg
—
—
EV/EBITDA
22.2x
S&P 500
15.2x
+46%
Industrials
13.9x
+60%
5Y Avg
17.2x
+29%
Price/FCF
30.4x
S&P 500
20.7x
+47%
Industrials
20.0x
+52%
5Y Avg
25.7x
+19%
Price/Sales
2.3x
S&P 500
3.1x
-27%
Industrials
1.6x
+44%
5Y Avg
1.8x
+22%
Dividend Yield
3.12%
S&P 500
1.91%
+63%
Industrials
1.21%
+157%
5Y Avg
2.99%
+4%
| Metric | WSO | S&P 500 | Industrials | 5Y Avg WSO |
|---|---|---|---|---|
| Forward PE | 31.6x | 18.8x+68% | 21.2x+49% | — |
| Trailing PE | 32.7x | 24.4x+34% | 25.6x+28% | 27.9x+17% |
| PEG Ratio | 2.77x | 1.66x+67% | 1.65x+68% | — |
| EV/EBITDA | 22.2x | 15.2x+46% | 13.9x+60% | 17.2x+29% |
| Price/FCF | 30.4x | 20.7x+47% | 20.0x+52% | 25.7x+19% |
| Price/Sales | 2.3x | 3.1x-27% | 1.6x+44% | 1.8x+22% |
| Dividend Yield | 3.12% | 1.91% | 1.21% | 2.99% |
WSO trades above S&P 500 benchmarks on 5 of 6 measured multiples — commands a broad premium across most valuation dimensions.
Forward P/E and PEG reflect analyst consensus estimates. Historical averages use trailing ratios where forward data is unavailable.S&P 500 and sector benchmarks both use trailing median P/E — similar readings indicate the broader index and sector are priced alike.
Open valuation toolWSO Financial Health
Verdict
Strong
WSO generates $702M in free cash flow at a 9.7% margin — 16.6% ROIC signals a durable competitive advantage · returns 3.1% of market cap to shareholders annually.
Cash Engine
Revenue, margins, and cash generation
Revenue (TTM)
Trailing-twelve-month sales base
$7.2B
Revenue Growth
TTM vs prior year
-4.5%
Gross Margin
Gross profit as a share of revenue
28.4%
Operating Margin
Operating income divided by revenue
9.8%
Net Margin
Net income divided by revenue
6.8%
EPS (TTM)
Diluted earnings per share, trailing twelve months
$13.06
Free Cash Flow (TTM)
Cash generation after capex
$702M
FCF Margin
FCF as share of revenue — the primary cash quality signal
9.7%
Capital Quality
ROIC, leverage, and debt serviceability
ROIC
Return on invested capital — primary competitive quality signal
16.6%
ROA
Return on assets, trailing twelve months
10.8%
Cash & Equivalents
Liquid assets on the balance sheet
$433M
Net Debt
Total debt minus cash
$46M
Debt Serviceability
Net debt as a multiple of annual free cash flow
0.1× FCF
~0.1 years to full repayment at current FCF run-rate
ROE
Return on equity, trailing twelve months
15.3%
Shareholder Returns
How capital is returned to owners
Total shareholder yield
3.1%
Dividend
3.1%
Buyback
0.0%
Share Repurchases
Trailing buyback outflow — dollar magnitude of capital returned
$4M
Dividend / Share
Annualized trailing dividend per share
$12.50
Payout Ratio
Share of earnings distributed as dividends
95.3%
Shares Outstanding
Declining as buybacks retire shares
41M
All figures from the trailing twelve months. ROIC uses invested capital (equity + net debt).
Open full ratios pageWSO Stock Risk Factors
Key factors that could pressure the stock price, compress the multiple, or weigh on future results.
AI analysis · updated June 18, 2026
High Risk
Regulatory & Legal Risks
Watsco disclosed significant risks in the 'Legal & Regulatory' category, which could impact operations and financial performance.
High Risk
Tariff & Pricing Risks
Proposed tariffs and OEM pricing decisions pose material risks, particularly affecting sales in Canada and Latin America.
Medium
A2L Transition Risks
The transition to A2L refrigerants presents operational and sales challenges, especially in international markets.
Medium
Revenue Growth Risks
Bearish revenue growth assumptions (3.48% per year) suggest potential underperformance relative to market expectations.
Lower
Valuation Concerns
The bear case fair value of $362 implies a 6.7% downside risk at current share prices.
These are risk mechanisms, not predictions. The key question is which would force a cut to earnings estimates or a lower multiple than the market currently prices in.
Why WSO Stock Could Outperform
Structural drivers behind the upside case and why the stock could outperform over the next 12 months.
AI analysis · updated June 18, 2026
Diverse geographic footprint
Watsco operates over 670 locations across the US, Canada, Mexico, and the Caribbean, providing a broad market reach and resilience against regional economic fluctuations.
Industry leadership
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.
Strong institutional backing
The Nahmad Family and Founder Entities hold 25% of Watsco, indicating significant insider confidence and long-term commitment to the company's growth.
Regulated growth cycle
Watsco's business model benefits from navigating a regulated growth cycle, providing stability and predictable demand for HVAC/R products.
Consensus upside potential
Analysts project an 8.4% implied upside for WSO, with a $413 consensus target price, reflecting bullish sentiment on the stock's valuation.
Scale and balance sheet strength
Watsco's extensive scale and robust balance sheet offer a buffer against macroeconomic swings, enhancing its ability to weather market volatility.
A real bull case compounds — each driver matters most when it strengthens margins, supports capital returns, and keeps the company above the market's minimum growth bar simultaneously.
WSO Stock Price Performance
52-week range context and price returns across multiple time horizons. Dividend contribution is shown separately in the Capital Return section.
Current Price
$401.04
52W Range Position
45%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$323.05
+24.1% from the low
52-Week High
$494.94
-19.0% from the high
1 Month
+2.39%
3 Month
+6.11%
YTD
+15.5%
1 Year
-5.3%
3Y CAGR
+3.8%
5Y CAGR
+7.9%
10Y CAGR
+11.5%
Range context matters because valuation compression and earnings misses rarely hit from the same starting point. A stock already far below its high can still fall, but it is no longer carrying the same embedded optimism as one pressing a fresh peak.
WSO vs Peers
Valuation, growth, and margin comparison against the closest publicly traded peers for this company.
Peer Set
Accurate peer set
Forward PE
31.6x
vs 27.2x median
+16% above peer median
Revenue Growth
+3.7%
vs +6.0% median
-39% below peer median
Net Margin
6.8%
vs 8.6% median
-21% below peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
WSO WSO Watsco, Inc. | $16.3B | 31.6x | +3.7% | 6.8% | Hold | +1.5% |
GWW GWW W.W. Grainger, Inc. | $64.5B | 29.9x | +6.0% | 9.7% | Hold | -6.6% |
MSM MSM MSC Industrial Direct Co., Inc. | $6.6B | 27.2x | +3.5% | 5.4% | Hold | -6.3% |
FAS FAST Fastenal Company | $52.7B | 36.9x | +9.1% | 15.3% | Hold | +0.5% |
IBP IBP Installed Building Products, Inc. | $5.9B | 21.5x | +7.2% | 8.6% | Hold | +15.7% |
BLD BLDR Builders FirstSource, Inc. | $8.9B | 18.8x | +0.2% | 2.0% | Buy | +32.0% |
This peer comparison reflects companies with similar business models, product lines, or market positioning, supplemented by industry grouping when direct matches are limited.
WSO Dividend and Capital Return
WSO returns 3.1% total yield, led by a 3.12% dividend, raised 12 consecutive years.
Dividend At RiskFCF Adequate
Total Shareholder Yield
3.1%
Dividend + buyback return per year
Buyback Yield
0.0%
Dividend Yield
3.12%
Payout Ratio
95.3%
How WSO Splits Its Return
Div 3.12%
Dividend 3.12%Buybacks 0.0%
Dividend Profile
Yield, cadence, and growth quality
Dividend / Share
Trailing annualized cash dividend
$12.50
Growth Streak
Consecutive years of dividend increases
12Y
3Y Div CAGR
11.0%
5Y Div CAGR
11.1%
Ex-Dividend Date
—
Payment Cadence
Quarterly
4 payments over the last 12 months
Buyback Engine
How much per-share support comes from repurchases
Repurchases (TTM)
Cash used for buybacks in the latest trailing period
$4M
Estimated Shares Retired
9.1K
Approx. Share Reduction
0.0%
Shares Outstanding
Current diluted share count from the screening snapshot
41M
| Year | Div / Share | YoY Grw | BB Yield | Total Yield |
|---|---|---|---|---|
| 2026 | $6.30 | — | — | — |
| 2025 | $11.70 | +10.9% | 0.0% | 3.7% |
| 2024 | $10.55 | +7.7% | 0.2% | 2.6% |
| 2023 | $9.80 | +14.6% | 0.0% | 2.5% |
| 2022 | $8.55 | +12.1% | 1.0% | 4.7% |
FAQ
7 questionsWSO Investor Questions
Common questions answered from live analyst data and company financials.
01Is Watsco, Inc. (WSO) stock a buy or sell in 2026?
Watsco, Inc. (WSO) is rated Hold by Wall Street analysts as of 2026. Of 26 analysts covering the stock, 8 rate it Buy or Strong Buy, 16 rate it Hold, and 2 rate it Sell or Strong Sell. The consensus 12-month price target is $407, implying +1.5% from the current price of $401. The bear case scenario is $258 and the bull case is $539.
02What is the WSO stock price target for 2026?
The Wall Street consensus price target for WSO is $407 based on 26 analyst estimates. The high-end target is $485 (+20.9% from today), and the low-end target is $370 (-7.7%). The base case model target is $409.
03Is Watsco, Inc. (WSO) stock overvalued in 2026?
WSO trades at 31.6x times forward earnings. The stock trades at a notable premium to the broad market, which is typical for businesses with strong free cash flow and above-average growth expectations. Based on current multiples versus the peer group, the relative model signals slightly cheap versus peers. Whether the stock is over or undervalued ultimately depends on whether consensus earnings estimates are achievable.
04What are the main risks for Watsco, Inc. (WSO) stock in 2026?
The primary risks for WSO in 2026 are: (1) Regulatory & Legal Risks — Watsco disclosed significant risks in the 'Legal & Regulatory' category, which could impact operations and financial performance. (2) Tariff & Pricing Risks — Proposed tariffs and OEM pricing decisions pose material risks, particularly affecting sales in Canada and Latin America. (3) A2L Transition Risks — The transition to A2L refrigerants presents operational and sales challenges, especially in international markets. Each factor has the potential to pressure earnings or compress the stock's valuation multiple.
05What is Watsco, Inc.'s revenue and earnings forecast?
Analyst consensus estimates WSO will report consensus revenue of $7.5B (+3.7% year-over-year) and EPS of $12.61 (-3.5% year-over-year) for the upcoming fiscal year. The following year, analysts project $7.8B in revenue.
06When does Watsco, Inc. (WSO) report its next earnings?
Watsco, Inc. is expected to report its next earnings on approximately 2026-07-29. Consensus expects EPS of $4.36 and revenue of $2.1B. Over recent quarters, WSO has beaten EPS estimates 25% of the time.
07How much free cash flow does Watsco, Inc. generate?
Watsco, Inc. (WSO) generated $702M in free cash flow over the trailing twelve months — a free cash flow margin of 9.7%. WSO returns capital to shareholders through dividends (3.1% yield) and share repurchases ($4M TTM).