Watsco, Inc. (WSO-B) AI Stock Analysis

Founded in 1945 and based in Miami, Florida, Watsco, Inc. distributes air conditioning, heating, refrigeration equipment, and related parts and supplies through its subsidiaries. Its product line encompasses residential ducted and ductless air conditioners, gas, electric, and oil furnaces, commercial HVAC systems, and specialized equipment. Watsco also supplies replacement parts such as compressors, motors, and evaporator coils, as well as supplies including thermostats, insulation materials, refrigerants, ductwork, and plumbing supplies. Serving contractors and dealers across residential and light commercial replacement and new construction markets, Watsco operates 671 locations across the United States, Canada, Mexico, and Puerto Rico, and exports to Latin America and the Caribbean Basin.

Watsco grew revenue from $6.28B in FY2021 to a peak of $7.62B in FY2024 before revenue fell 5.0% to $7.24B in FY2025. Over the five years from FY2020 to FY2025, revenue achieved a CAGR of 7.4%. Net income dropped from $601.2M in FY2022 to $497.0M in FY2025, with EPS declining from $14.21 to $10.43 over the same timeframe. FY2025 gross margin stood at 28.0% while operating margin settled at 9.6%. Over the trailing twelve months, revenue was $7.28B with EPS of $11.67. For the latest quarter ended June 30, 2026, quarterly revenue increased 2.1% year-over-year while quarterly earnings fell 11.7%.

As of June 30, 2026, Watsco held $464.2M in cash and short-term investments against total debt of $535.3M, resulting in net debt of $71.1M. The company maintains solid liquidity with a current ratio of 3.20, total assets of $5.08B, and shareholders' equity of $2.99B, alongside a debt-to-equity ratio of 0.18. Operating cash flow reached $569.6M in FY2025, yielding free cash flow of $535.1M. Capital allocation was directed toward $473.8M in dividends paid, $34.5M in capital expenditures, and $3.7M in share buybacks.

At $287.50 on October 12, 2026, Watsco had a market capitalization of $11.72B and an enterprise value of $13.50B. The stock trades at a trailing P/E of 24.4x, slightly below the 24.8x median of its US-listed Industrials peers, while its forward P/E of 21.2x and EV/EBITDA of 19.3x exceed peer medians of 17.2x and 13.9x, respectively. Watsco's price-to-sales multiple is 1.6x against the peer median of 1.5x. Over the past year, Watsco shares dropped 26.2%, underperforming the 20.4% gain of the S&P 500 (SPY).

Watsco pays a quarterly dividend with a forward annual rate of $13.20, representing a 4.59% dividend yield. The company has paid dividends for 42 consecutive years with an annualized 5-year dividend growth rate of 11.1%. Its payout ratio is 3.2%, and the last ex-dividend date was October 16, 2026.

Consensus estimates project Watsco's revenue to reach $7.56B for the fiscal year ending December 31, 2026. For the subsequent fiscal year, analysts forecast revenue of $8.00B, implying 5.8% annual revenue growth. Over the last four quarters, the company recorded 0 EPS beats. No consensus ratings or price targets are reported.

This page is an AI-written research summary of Watsco, Inc. (WSO-B). The text was generated on October 30, 2026 from Quotelinks data as of October 12, 2026 (company profile, annual results, latest balance sheet, valuation, price performance and analyst estimates). An automatic check rejects any draft that contains a figure not found in that data. It is not investment advice; verify figures on the linked tabs before making decisions.

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