Upside case
Bull case
$579+37.5%
WSO would need investors to value it at roughly 46x earnings — about 13x more generous than today's 33x forward P/E. That requires meaningful multiple expansion on top of continued earnings growth.
Analysis OverviewHoldUpdated May 1, 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
$400
-5.0% vs today
Scenario Range
$296 – $579
Model bear to bull value window
Coverage
26
Published analyst ratings
Valuation Context
33.4x
Forward P/E · Market cap $17.1B
WSO price targets
Three scenarios for where WSO stock could go
Current
~$421
Confidence
51 / 100
Updated
May 1, 2026
Where we are now
Current · $421
Bear
$296
Base
$421
Bull
$579
Market caseClosest to today
Base case
$421-0.0%
This is close to how the market is already pricing WSO — at roughly 33x forward earnings. No dramatic re-rating needed, just steady execution on the core business.
Stress case
Bear case
$296-29.7%
If investor confidence fades or macro conditions deteriorate, a 10x multiple contraction could push WSO down roughly 30% 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
$17.1B
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
$7.2B
+0.1% YoY
FY2
$7.2B
-0.1% YoY
EPS Outlook
FY1
$12.19
-6.7% YoY
FY2
$12.25
+0.5% YoY
Trailing FCF (TTM)$702M
FCF Margin: 9.7%
Next Earnings
—
Expected EPS
—
Expected Revenue
—
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
Overvalued
Fair value est. $336 — implies -21.6% from today's price.
Premium to Fair Value
21.6%
above fair value
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
WSO
34.3x
vs
S&P 500
25.1x
+37% premium
vs Industrials Trailing P/E
WSO
34.3x
vs
Industrials
25.7x
+34% premium
vs WSO 5Y Avg P/E
Today
34.3x
vs
5Y Average
27.9x
+23% premium
Forward PE
33.4x
S&P 500
19.1x
+75%
Industrials
20.7x
+61%
5Y Avg
—
—
Trailing PE
34.3x
S&P 500
25.1x
+37%
Industrials
25.7x
+34%
5Y Avg
27.9x
+23%
PEG Ratio
2.91x
S&P 500
1.72x
+69%
Industrials
1.64x
+77%
5Y Avg
—
—
EV/EBITDA
23.3x
S&P 500
15.2x
+53%
Industrials
13.7x
+71%
5Y Avg
17.2x
+35%
Price/FCF
31.9x
S&P 500
21.1x
+51%
Industrials
21.2x
+51%
5Y Avg
25.7x
+24%
Price/Sales
2.4x
S&P 500
3.1x
-24%
Industrials
1.6x
+49%
5Y Avg
1.8x
+28%
Dividend Yield
2.97%
S&P 500
1.87%
+59%
Industrials
1.27%
+134%
5Y Avg
2.99%
-0%
| Metric | WSO | S&P 500 | Industrials | 5Y Avg WSO |
|---|---|---|---|---|
| Forward PE | 33.4x | 19.1x+75% | 20.7x+61% | — |
| Trailing PE | 34.3x | 25.1x+37% | 25.7x+34% | 27.9x+23% |
| PEG Ratio | 2.91x | 1.72x+69% | 1.64x+77% | — |
| EV/EBITDA | 23.3x | 15.2x+53% | 13.7x+71% | 17.2x+35% |
| Price/FCF | 31.9x | 21.1x+51% | 21.2x+51% | 25.7x+24% |
| Price/Sales | 2.4x | 3.1x-24% | 1.6x+49% | 1.8x+28% |
| Dividend Yield | 2.97% | 1.87% | 1.27% | 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 3.0% 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
3.0%
Dividend
3.0%
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 April 29, 2026
High Risk
Legislation and Regulation
Changes in laws and regulations related to financial services, consumer protection, anti-money laundering (AML), and sanctions can significantly impact Western Union's business model. This could lead to increased operational costs and affect revenue streams.
High Risk
Cybersecurity
Cybersecurity is identified as the number one enterprise risk for Western Union. Breaches in information security can adversely affect operations, reputation, and financial performance, potentially leading to significant financial losses.
High Risk
Agent Compliance
Western Union faces risks if its agents or subagents fail to comply with regulations, as the company has limited legal and practical control over these third parties. Non-compliance can result in regulatory actions, fines, and reputational damage.
Medium
Credit and Liquidity Risk
The company is exposed to credit and liquidity risks from its agents, consumers, businesses, and third-party processors. These risks could impact Western Union's financial stability and operational capabilities.
Medium
Competition and Pricing
Intense competition, particularly from digital competitors with lower cost structures, forces Western Union to price its services competitively. This competitive pressure could erode its 'take rate', negatively impacting profitability.
Medium
Reliance on Remittance Business
Western Union's consumer service segment relies heavily on its core remittance business. A deterioration in the remittance business could negatively impact other services and overall financial performance.
Lower
Fraud
The company faces fraud risks from various parties involved in its transactions. While this is a concern, the financial impact may be mitigated through existing controls and risk management strategies.
Lower
Model Risk
Western Union uses quantitative models for various functions, and flawed or inaccurate models can lead to financial losses and poor business decisions. However, the impact may be limited if managed effectively.
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 April 29, 2026
Market Leadership and Fragmentation
WSO holds a significant market share in a highly fragmented industry, allowing for continued growth through organic expansion and acquisitions. This leadership position enables WSO to capitalize on market opportunities and strengthen its competitive edge.
Catalysts for Growth
The company benefits from secular trends in the HVAC/R market, including the adoption of A2L refrigerants and increased sales of high-efficiency HVAC systems. These trends are expected to drive demand and enhance WSO's growth prospects.
Strong Financial Performance
WSO has demonstrated consistent revenue growth, with Q4 2024 revenue improving by 9% year-over-year (YoY) and gross profit growing by 13%. Additionally, free cash flow saw a significant YoY increase of 28.6%, showcasing the company's financial health.
Operating Leverage
The company's ability to leverage its business model can lead to substantial profit growth as revenue increases. This operational efficiency is expected to enhance overall profitability.
Acquisition Strategy
WSO has a history of successful acquisitions, expanding its scale and market share. The company could further grow by expanding into related markets, such as plumbing equipment, which would diversify its offerings.
Pricing Power and Margins
Bulls point to robust pricing power and strong gross margins, with expectations of further increases from major original equipment manufacturers (OEMs). Anticipated margin expansion driven by efficiency gains and a favorable product mix supports the bullish outlook.
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
$420.68
52W Range Position
56%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$323.05
+30.2% from the low
52-Week High
$496.25
-15.2% from the high
1 Month
+11.14%
3 Month
+3.63%
YTD
+21.1%
1 Year
-12.2%
3Y CAGR
+7.7%
5Y CAGR
+7.2%
10Y CAGR
+12.2%
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
33.4x
vs 25.4x median
+31% above peer median
Revenue Growth
+0.1%
vs +3.3% median
-98% below peer median
Net Margin
6.8%
vs 8.9% median
-23% below peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
WSO WSO Watsco, Inc. | $17.1B | 33.4x | +0.1% | 6.8% | Hold | -5.0% |
GWW GWW W.W. Grainger, Inc. | $54.0B | 26.0x | +5.7% | 9.5% | Hold | +2.0% |
MSM MSM MSC Industrial Direct Co., Inc. | $5.7B | 23.7x | +1.2% | 5.4% | Hold | -5.1% |
FAS FAST Fastenal Company | $50.9B | 35.8x | +8.9% | 15.3% | Hold | +5.1% |
IBP IBP Installed Building Products, Inc. | $7.6B | 25.4x | +3.3% | 8.9% | Hold | +3.8% |
BLD BLDR Builders FirstSource, Inc. | $8.2B | 13.2x | -3.3% | 2.0% | Buy | +47.4% |
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 3.0% total yield, led by a 2.97% dividend, raised 12 consecutive years.
Dividend At RiskFCF Adequate
Total Shareholder Yield
3.0%
Dividend + buyback return per year
Buyback Yield
0.0%
Dividend Yield
2.97%
Payout Ratio
95.3%
How WSO Splits Its Return
Div 2.97%
Dividend 2.97%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
8.7K
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 $400, implying -5.0% from the current price of $421. The bear case scenario is $296 and the bull case is $579.
02What is the WSO stock price target for 2026?
The Wall Street consensus price target for WSO is $400 based on 26 analyst estimates. The high-end target is $485 (+15.3% from today), and the low-end target is $349 (-17.0%). The base case model target is $421.
03Is Watsco, Inc. (WSO) stock overvalued in 2026?
WSO trades at 33.4x 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 overvalued. 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) Legislation and Regulation — Changes in laws and regulations related to financial services, consumer protection, anti-money laundering (AML), and sanctions can significantly impact Western Union's business model. (2) Cybersecurity — Cybersecurity is identified as the number one enterprise risk for Western Union. (3) Agent Compliance — Western Union faces risks if its agents or subagents fail to comply with regulations, as the company has limited legal and practical control over these third parties. 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 $7.2B (+0.1% year-over-year) and EPS of $12.19 (-6.7% year-over-year) for the upcoming fiscal year. The following year, analysts project $7.2B in revenue.
06When does Watsco, Inc. (WSO) report its next earnings?
A confirmed upcoming earnings date for WSO is not yet available. Check the Earnings section above for the most recent quarterly report dates and forward estimates.
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 (3.0% yield) and share repurchases ($4M TTM).