Watsco, Inc. (WSO) AI Stock Analysis

Watsco, Inc. distributes air conditioning, heating, and refrigeration (HVACR) equipment, parts, and supplies. Its offerings include residential ducted and ductless air conditioners, gas, electric, and oil furnaces, commercial HVAC systems, and specialized equipment. It also supplies replacement parts such as compressors, evaporator coils, and motors, alongside ancillary products including thermostats, insulation, refrigerants, and ductwork. Operating across 671 locations in the United States, Canada, Mexico, and Puerto Rico, Watsco primarily serves contractors and dealers handling replacement and new construction markets, while also exporting to Latin America and the Caribbean Basin.

Over the five fiscal years from FY2020 to FY2025, Watsco generated a revenue compound annual growth rate of 7.4%. Revenue rose from $6.28B in FY2021 to a peak of $7.62B in FY2024 before declining 5.0% to $7.24B in FY2025. Gross margin reached 28.0% in FY2025, up from 26.6% in FY2021, while operating margin was 9.6% compared to 10.0% in FY2021. Net income totaled $497.0M in FY2025 with diluted earnings per share of $12.11. For the latest quarter ended June 30, 2026, 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. Shareholders' equity stood at $2.99B with total assets of $5.08B. The company displays strong liquidity with a current ratio of 3.20 and a conservative debt-to-equity ratio of 0.18. In FY2025, Watsco generated $569.6M in operating cash flow and $535.1M in free cash flow, deploying $34.5M toward capital expenditures, $3.7M to share buybacks, and $473.8M to dividend payments.

Watsco carries a market capitalization of $12.21B and an enterprise value of $13.02B. The stock trades at a trailing price-to-earnings multiple of 25.4x, above the 24.8x median of its US-listed Industrials peers. Its forward price-to-earnings ratio of 21.3x and enterprise value to EBITDA of 18.6x also sit above peer medians of 17.2x and 13.9x, respectively. Over the past year, Watsco shares dropped 17.0%, while the S&P 500 returned 16.8%. Over five years, the stock gained 20.1% compared to an 83.0% return for the broader index.

Watsco has paid dividends for 42 consecutive years and yields 4.46% based on an annual forward dividend of $13.20 per share. Dividends are paid quarterly, and the payout has expanded at an annualized 5-year growth rate of 11.1%. In FY2025, the company paid $473.8M in dividends, bringing its trailing payout ratio to 111.9%. The most recent ex-dividend date was October 16, 2026.

Wall Street coverage includes 3 Strong Buy, 10 Hold, and 1 Strong Sell ratings. The mean price target is $367.40, representing 24.2% upside relative to the last close of $295.91. Consensus estimates project FY2026 revenue of $7.56B and EPS of $12.16, followed by FY2027 revenue of $8.00B with EPS of $13.26. Watsco exceeded earnings expectations in 1 of its past 4 quarters, with its next earnings report scheduled for October 27, 2026.

This page is an AI-written research summary of Watsco, Inc. (WSO). The text was generated on October 30, 2026 from Quotelinks data as of October 16, 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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