Watsco Inc

Watsco reported second-quarter revenues of $2.10 billion, up 2.1% year on year but falling 1.9% short of analysts' expectations, in a quarter that saw the 24 industrial distributors stocks tracked by the report collectively beat consensus revenue estimates by 3.7%. The HVAC and refrigeration distributor also posted a significant miss of analysts' EPS estimates, and its stock is down 17.4% since reporting, trading at $303.57. Chairman and CEO Albert H. Nahmad said the quarter's performance was indicative of improving end-market stability after a busy period of regulatory transitions. Among peers, Transcat reported revenues of $92.95 million, up 21.6% year on year and 7.4% above expectations, while SiteOne posted $1.53 billion, up 4.7% but 0.7% below estimates, Alta Equipment Group reported $475.5 million, down 1.2% and 3.1% short, and Core & Main reported $2.15 billion, up 2.5% and in line with expectations. On average, shares of the group are down 5.2% since the latest earnings results.

Watsco, Inc. reported second-quarter 2026 sales of US$2,104.86 million, with net income of US$163.34 million and diluted EPS from continuing operations of US$4, both lower than a year earlier despite slightly higher sales. International markets, including Canada and Latin America/Caribbean, contributed under 9% of revenue and came in below analyst expectations, underscoring the current softness of Watsco's non-U.S. operations. The company also maintained its quarterly cash dividend at US$3.30 per share following a 10% increase in April, highlighting management's focus on shareholder returns even as earnings softened. The results reinforce that near-term margin stabilization remains the key catalyst, while risks persist from tariffs, refrigerant issues, and weak international demand.

Watsco stock tumbled 15.3% through 10:45 a.m. ET Wednesday after the HVAC distributor reported second-quarter earnings that fell short of analyst expectations. Analysts had forecast earnings of $4.41 per share on more than $2.1 billion in sales, but Watsco earned $4 per share and its sales came in just below estimates. Revenue grew only 2% year over year, while gross profit declined and operating costs rose, leading to a 12% drop in earnings. The company recently acquired Jackson Supply and continues to seek additional acquisitions to spur growth in the fragmented North American HVAC market.

Watsco, Inc. announced a decline in second-quarter profit. The company's earnings totaled $152.603 million, or $4.00 per share, compared with $171.454 million, or $4.52 per share, in the same period last year. Revenue for the quarter rose 2.0% to $2.104 billion from $2.062 billion a year earlier.

StockStory has identified three mid-cap stocks that raise concerns for investors. Watsco, with a market cap of $15.43 billion, saw flat sales over the last two years and a 3.7% annual decline in earnings per share, partly due to shareholder dilution. Illumina, valued at $25.15 billion, also experienced flat sales over the same period and posted a return on capital of just 0.7%, signaling difficulty in finding profitable growth. First Horizon, a $11.86 billion bank, reported slower net interest income growth than peers and earnings per share growth of only 5.7% annually over five years, with tangible book value per share growth expected to slow to 5.3%.

StockStory identifies Apple and Analog Devices as stocks poised to prove Wall Street wrong, while flagging Watsco as facing legitimate challenges. Apple, trading at $294.65 per share with a forward P/E of 32.6x, benefits from enduring brand strength and elite operating margins despite sluggish recent growth. Analog Devices, at $410.08 per share and a 32.2x forward P/E, stands out for its 15.5% annual revenue growth over five years and best-in-class 62% gross margin. Watsco, priced at $387.69 with a 31.2x forward P/E, is weighed down by stagnating sales, 3.7% annual EPS declines from share issuance, and diminishing returns on capital.