Watsco
WSO
$326.71
-1.03%
Watsco, Inc. is the largest distributor of HVAC and refrigeration products in North America, serving over 120,000 dealers and contractors across the United States, Canada, Latin America, and the Caribbean. With approximately 13% market share and a dominant position in the Sunbelt states, Watsco is a critical intermediary between manufacturers and the residential and light-commercial replacement and new-construction markets. The company is currently navigating a challenging demand environment, as evidenced by flat revenue growth and a sharp stock price decline, while simultaneously achieving record gross margins and generating strong cash flow, leading to a 10% dividend increase. Investor attention is focused on the company's ability to manage through cyclical headwinds, its strategic inventory reduction initiatives, and the potential for margin expansion to offset volume softness.…
WSO
Watsco
$326.71
Related headlines
WSO 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Watsco's 12-month outlook, with a consensus price target around $382.20 and implied upside of +17.0% versus the current price.
Average Target
$382.20
0 analysts
Implied Upside
+17.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$330 - $485
Analyst target range
Watsco is covered by 10 analysts, with a consensus recommendation of 'hold' and a mean recommendation score of 2.79 (where 1 is strong buy and 5 is sell). The average target price is $382.20, which implies an upside of approximately 19.1% from the current price of $321.02. The distribution of ratings is not provided, but the 'hold' consensus and the fact that recent actions from major firms (Morgan Stanley, JP Morgan, Mizuho, UBS) have been 'Equal Weight' or 'Neutral' indicate a cautious stance. Only Stephens & Co. has an 'Overweight' rating, suggesting limited bullish conviction.
WSO Technical Analysis
Watsco's stock is in a pronounced downtrend, with a 1-year price change of -23.2% and a 6-month change of -23.6%. The current price of $321.02 sits near the lower end of its 52-week range, at approximately 70% of the range (calculated as (321.02 - 300.66) / (459.00 - 300.66)), indicating that the stock is trading closer to its 52-week low of $300.66 than its high of $459.00. This positioning suggests that the market is pricing in significant negative sentiment, and the stock may be approaching oversold conditions, but the persistent downtrend cautions against catching a falling knife.
Beta
1.04
1.04x market volatility
Max Drawdown
-36.9%
Largest decline past year
52-Week Range
$301-$459
Price range past year
Annual Return
-20.5%
Cumulative gain past year
| Period | WSO Return | S&P 500 |
|---|---|---|
| 1m | -14.9% | +2.4% |
| 3m | -21.7% | +4.7% |
| 6m | -23.6% | +11.7% |
| 1y | -20.5% | +21.3% |
| ytd | -5.9% | +13.4% |
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WSO Fundamental Analysis
Watsco's revenue growth has stagnated, with the most recent quarter (Q1 2026) showing revenue of $1.533 billion, essentially flat year-over-year (0.13% growth). This follows a pattern of deceleration from Q2 2025 (revenue $2.062 billion, down from $2.139 billion in Q2 2024) and Q3 2025 (revenue $2.067 billion, down from $2.160 billion in Q3 2024), indicating a multi-quarter trend of declining or flat sales. The company's residential HVAC end-market, which accounts for 75-80% of revenue, is facing demand headwinds, but the commercial segment and replacement market provide some stability. The flat revenue growth underscores the cyclical challenges in the HVAC industry, but Watsco's ability to maintain revenue levels despite industry headwinds demonstrates its market resilience.
Quarterly Revenue
$1.5B
2026-03
Revenue YoY Growth
+0.1%
YoY Comparison
Gross Margin
27.9%
Latest Quarter
Free Cash Flow
$695208000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
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Valuation Analysis: Is WSO Overvalued?
Given that Watsco is profitable (net income of $79.1 million in Q1 2026), the PE ratio is the appropriate primary valuation metric. The trailing PE is 27.5x, while the forward PE is 24.0x, implying that the market expects earnings growth of approximately 15% over the next year. This forward discount suggests that analysts anticipate a recovery in earnings, likely driven by margin expansion and cost controls, despite the current revenue stagnation. The PEG ratio is negative (-3.37), which is a red flag, but this is due to negative earnings growth expectations in the past, and the forward PE indicates a more optimistic outlook.
PE
27.5x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 12x~66x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
16.4x
Enterprise Value Multiple