Equity Profile

WSO

Watsco, Inc.

IndustrialsTrading Companies & Distributors$15.5B

Apr28Tue

Post-Earnings Recap

ReportedQ1-2026Pre-Market7:30 AM EDT

Watsco, Inc. Beats on EPS, Stock Up 3.68%

Metric	Actual	Expected	Surprise
EPS	$1.87	$1.69	+7.97%
Revenue	N/A	$1.5B	N/A

management commentary, guidance changes, and full analysis available with Pro.

Watsco, Inc. Beats on EPS, Stock Up 3.68%

Key Numbers

Metric	Actual	Expected	Surprise
EPS	$1.87	$1.69	+7.97%
Revenue	N/A	$1.5B	N/A

Management Commentary

Tone: Cautiously Optimistic

Overall, management expressed cautious optimism about the future, emphasizing their commitment to navigating current market challenges. They are focused on maintaining efficiency despite supply chain issues.

Management highlighted strong demand in key markets.

They noted ongoing challenges in supply chain but remain focused on operational efficiency.

What It Means

Watsco's strong EPS performance indicates better-than-expected profitability, which likely contributed to the positive stock reaction of 3.68%. However, the lack of revenue data and guidance leaves some uncertainty about future performance. Investors may be encouraged by management's comments on demand and operational focus, but ongoing supply chain challenges remain a concern.

Company Snapshot

Watsco Inc. (WSO) is a leading distributor of air conditioning, heating, and refrigeration products in the U.S....

Key Metrics to Watch

EPS

Earnings per share is a key indicator of profitability and will show how well the company is managing costs and generating income.

$1.69

Revenue

Total revenue reflects the company's sales performance and market demand for its products.

$1.5B

Wall Street expectations, options signals, track record, and call prep available with Pro.

Original Pre-Earnings Preview

Context

Company Snapshot

Watsco Inc. (WSO) is a leading distributor of air conditioning, heating, and refrigeration products in the U.S. industrial sector. With a market cap of $19 billion, the company plays a crucial role in the HVAC industry, which is influenced by trends in construction, energy efficiency, and consumer spending.

Earnings Scorecard·Last 8Q

EPS Beat Streak

EPS Beat Rate

25%

Avg EPS Surprise

-5.04%

Avg Stock Reaction

-1.83%

Last Quarter Recap

In the last quarter, Watsco reported an EPS of $1.68, which was below the expected $1.94, resulting in a negative surprise of 13.31%. The stock reacted positively, gaining 1.17% the following day.

Management Promises & Guidance

Expectations

Wall Street Expectations

Analysts are cautiously optimistic about Watsco's upcoming earnings, with expectations for an EPS of $1.69 and revenue of $1.5 billion. The company has struggled with earnings misses in recent quarters, which has raised concerns about its ability to meet or exceed estimates.

Bull Case

If Watsco can deliver better-than-expected earnings and show signs of revenue growth, it could restore investor confidence and drive the stock price higher. Strong demand in the HVAC market could also support this positive outlook.

Bear Case

On the other hand, if Watsco misses earnings expectations again, it may lead to further declines in stock price, as investors could lose faith in the company's growth trajectory amid ongoing economic uncertainties.

Key Metrics to Watch

EPS

$1.69

Earnings per share is a key indicator of profitability and will show how well the company is managing costs and generating income.

Revenue

$1.5B

Total revenue reflects the company's sales performance and market demand for its products.

Expectations

Two Questions That Matter

The print will turn on these two things.

Will Watsco's EPS meet or exceed the consensus estimate of $1.69?

Given the company's recent history of missing earnings estimates, this will be a critical indicator of its operational performance and market demand.

What insights can management provide on revenue growth in the HVAC market?

Understanding revenue trends will help gauge the company's ability to capitalize on market opportunities and manage costs effectively.

Edge

What the Street Is Missing

Why consensus could be wrong

The consensus may underestimate Watsco's ability to rebound from recent earnings misses, as the HVAC market is showing signs of recovery driven by increased construction activity and energy efficiency demands.

Supporting Evidence

Options are pricing an 8% move, but the stock has only averaged 5.56% in historical moves, suggesting overblown expectations.

The recent trend in construction spending indicates potential growth in HVAC demand, which could positively impact revenue.

Key Risk

If the company reports an EPS above $1.75, it could challenge the current bearish sentiment and shift investor expectations.

Edge

Thesis-Break Levels

Pre-commit to what would confirm each case.

The core debate this quarter revolves around whether Watsco can recover from its recent earnings misses and demonstrate growth in a competitive market.

Bull Confirmed If

An EPS of $1.75 or higher, indicating stronger profitability than expected.

Bear Confirmed If

An EPS below $1.50, confirming ongoing challenges in meeting market demand.

Pre-Earnings Positioning

Options Market

Implied Move

±8.01%

Historical Avg

±5.56%

Pricing rich

The options market is pricing in an expected move of about 8% in either direction following the earnings report, indicating uncertainty among investors.

Options are pricing a larger move than the stock has averaged historically, suggesting heightened expectations for volatility.

Detail

ATM IV

0.9%

30d HV

37.6%

Calls (6K)P/C Ratio: 66.46Puts (392K)

Edge

Historical Setup Match

Cross-company pattern from 30 similar setups.

Prior-quarter miss + options rich in Industrials

n=30

Fade rate: 6 of 18 (33%)

This setup has occurred 30 times across Industrials in the last 2 years. 12 of 18 (67%) held or extended their move within 5 days — this setup typically holds direction. The average absolute 1-day move is 4.6%, with a raw directional average of -0.4% (modestly negative historical bias).

Preparation

Post-Print Playbook

Likely market behavior by outcome — not investment advice.

Beat & Raise

If Watsco beats expectations, history suggests the stock could rise by around 9.73%, confirming a recovery in demand and operational efficiency.

In-Line / Cautious

If results are in line with expectations, the stock may experience a muted reaction, reflecting ongoing investor caution amid economic uncertainties.

Miss

Should Watsco miss earnings again, history suggests a potential decline of about 1.98%, which could further shake investor confidence.

Earnings Track Record

Preparation

What to Listen For

Call Prep

1Any commentary on market demand for HVAC products and services.
2Updates on cost management strategies and their impact on margins.
3Insights into inventory levels and supply chain challenges.
4Details on any new product launches or innovations in the pipeline.
5Management's outlook on the broader economic environment and its potential impact on future sales.

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Company Snapshot

Watsco Inc. (WSO) is a leading distributor of air conditioning, heating, and refrigeration products in the U.S....

Key Metrics to Watch

EPS

Earnings per share is a key indicator of profitability and will show how well the company is managing costs and generating income.

$1.69

Revenue

Total revenue reflects the company's sales performance and market demand for its products.

$1.5B

Wall Street expectations, options signals, track record, and call prep available with Pro.

Original Pre-Earnings Preview

Context

Company Snapshot

Earnings Scorecard·Last 8Q

EPS Beat Streak

EPS Beat Rate

25%

Avg EPS Surprise

-5.04%

Avg Stock Reaction

-1.83%

Last Quarter Recap

In the last quarter, Watsco reported an EPS of $1.68, which was below the expected $1.94, resulting in a negative surprise of 13.31%. The stock reacted positively, gaining 1.17% the following day.

Management Promises & Guidance

Expectations

Wall Street Expectations

Bull Case

Bear Case

Key Metrics to Watch

EPS

$1.69

Earnings per share is a key indicator of profitability and will show how well the company is managing costs and generating income.

Revenue

$1.5B

Total revenue reflects the company's sales performance and market demand for its products.

Expectations

Two Questions That Matter

The print will turn on these two things.

Will Watsco's EPS meet or exceed the consensus estimate of $1.69?

Given the company's recent history of missing earnings estimates, this will be a critical indicator of its operational performance and market demand.

What insights can management provide on revenue growth in the HVAC market?

Understanding revenue trends will help gauge the company's ability to capitalize on market opportunities and manage costs effectively.

Edge

What the Street Is Missing

Why consensus could be wrong

Supporting Evidence

Options are pricing an 8% move, but the stock has only averaged 5.56% in historical moves, suggesting overblown expectations.

The recent trend in construction spending indicates potential growth in HVAC demand, which could positively impact revenue.

Key Risk

If the company reports an EPS above $1.75, it could challenge the current bearish sentiment and shift investor expectations.

Edge

Thesis-Break Levels

Pre-commit to what would confirm each case.

The core debate this quarter revolves around whether Watsco can recover from its recent earnings misses and demonstrate growth in a competitive market.

Bull Confirmed If

An EPS of $1.75 or higher, indicating stronger profitability than expected.

Bear Confirmed If

An EPS below $1.50, confirming ongoing challenges in meeting market demand.

Pre-Earnings Positioning

Options Market

Implied Move

±8.01%

Historical Avg

±5.56%

Pricing rich

The options market is pricing in an expected move of about 8% in either direction following the earnings report, indicating uncertainty among investors.

Options are pricing a larger move than the stock has averaged historically, suggesting heightened expectations for volatility.

Detail

ATM IV

0.9%

30d HV

37.6%

Calls (6K)P/C Ratio: 66.46Puts (392K)

Edge

Historical Setup Match

Cross-company pattern from 30 similar setups.

Prior-quarter miss + options rich in Industrials

n=30

Fade rate: 6 of 18 (33%)

Preparation

Post-Print Playbook

Likely market behavior by outcome — not investment advice.

Beat & Raise

If Watsco beats expectations, history suggests the stock could rise by around 9.73%, confirming a recovery in demand and operational efficiency.

In-Line / Cautious

If results are in line with expectations, the stock may experience a muted reaction, reflecting ongoing investor caution amid economic uncertainties.

Miss

Should Watsco miss earnings again, history suggests a potential decline of about 1.98%, which could further shake investor confidence.

Earnings Track Record

Preparation

What to Listen For

Call Prep

1Any commentary on market demand for HVAC products and services.
2Updates on cost management strategies and their impact on margins.
3Insights into inventory levels and supply chain challenges.
4Details on any new product launches or innovations in the pipeline.
5Management's outlook on the broader economic environment and its potential impact on future sales.