Equity Profile

WSO

Watsco, Inc.

IndustrialsTrading Companies & Distributors$15.5B

Jul29Wed

Pre-Earnings Brief

UpcomingQ2-2026Pre-Market9:00 AM EDT

Company Snapshot

Watsco, Inc. is a leading distributor of air conditioning, heating, and refrigeration products....

Key Metrics to Watch

Revenue Growth

This metric indicates how well Watsco is expanding its business and capturing market share in a competitive environment.

N/A

EPS (Earnings Per Share)

EPS is a key indicator of profitability and is closely watched by investors to gauge financial health.

N/A

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

WSO Q2-2026 Earnings Preview

Context

Company Snapshot

Watsco, Inc. is a leading distributor of air conditioning, heating, and refrigeration products. Operating in the industrials sector, the company plays a crucial role in the HVAC industry, which is influenced by trends in construction 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 Q1 2026, Watsco reported an EPS of $1.87, surpassing estimates by nearly 8%. However, the stock price fell by 4.03% the following day, indicating mixed investor sentiment.

Management Promises & Guidance

Expectations

Wall Street Expectations

Investors are cautiously optimistic about Watsco's upcoming earnings, given its recent EPS beat. However, concerns about revenue growth persist.

Bull Case

If Watsco can demonstrate strong revenue growth and maintain or improve its operating margins, it could lead to a positive market reaction.

Bear Case

On the other hand, if the company fails to meet expectations for revenue or shows signs of declining margins, it could trigger further stock price declines.

Expectations

Two Questions That Matter

The print will turn on these two things.

What is the expected revenue growth rate for Q2 2026?

Revenue growth is critical for assessing Watsco's market position and ability to attract customers in a competitive landscape.

How is Watsco managing its operating margins in the current economic environment?

Operating margins will indicate how well the company is controlling costs and maintaining profitability amid potential economic challenges.

Edge

What the Street Is Missing

Why consensus could be wrong

The Street may underestimate Watsco's ability to capitalize on rising HVAC demand, especially as construction activity picks up.

Supporting Evidence

Recent trends in construction indicate a potential uptick in HVAC installations, which could boost Watsco's revenue.

The options market is pricing a lower move than historical averages, suggesting a potential mispricing of volatility.

Watsco's recent EPS beat may indicate stronger underlying performance than analysts expect.

Key Risk

If revenue growth exceeds 10%, it could challenge the current cautious consensus.

Edge

Thesis-Break Levels

Pre-commit to what would confirm each case.

The core debate this quarter revolves around Watsco's ability to sustain growth and manage costs effectively in a fluctuating market.

Bull Confirmed If

Revenue growth of 10% or more year-over-year would confirm the bull case.

Bear Confirmed If

A decline in operating margins below 15% would support the bear case.

Pre-Earnings Positioning

Options Market

Implied Move

±2.55%

Historical Avg

±5.3%

Pricing cheap

The options market is pricing a modest move in Watsco's stock following the earnings report, suggesting uncertainty among investors.

Options are pricing ±2.5% while WSO has averaged ±5.3% over the last 8 prints — setup is pricing cheap.

Detail

ATM IV

0.4%

30d HV

33.0%

Calls (25K)P/C Ratio: 0.22Puts (4K)

Edge

Historical Setup Match

Cross-company pattern from 30 similar setups.

Prior-quarter beat + options pricing cheap in Industrials

n=30

Fade rate: 6 of 24 (25%)

This setup has occurred 30 times across Industrials in the last 2 years. 18 of 24 (75%) held or extended their move within 5 days — this setup typically holds direction. The average absolute 1-day move is 4.7%, with a raw directional average of +1.7% (modestly positive 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 an average of 2.85%, confirming a positive outlook.

In-Line / Cautious

If results are in line but management expresses caution, the stock may see a muted reaction as investors digest the commentary.

Miss

Should the company miss expectations, the average historical reaction indicates a potential decline of around 3.40%, reflecting investor disappointment.

Earnings Track Record

Preparation

What to Listen For

Call Prep

1Any updates on revenue growth projections for the HVAC segment.
2Management's commentary on cost control measures and their impact on margins.
3Insights into customer demand trends in the construction sector.
4Details on any new product offerings or market expansions.
5Responses to competitive pressures in the HVAC distribution market.

See the full picture

AI-powered briefs, options data, and 20 quarters of history — everything you need before earnings.

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Company Snapshot

Watsco, Inc. is a leading distributor of air conditioning, heating, and refrigeration products....

Key Metrics to Watch

Revenue Growth

This metric indicates how well Watsco is expanding its business and capturing market share in a competitive environment.

N/A

EPS (Earnings Per Share)

EPS is a key indicator of profitability and is closely watched by investors to gauge financial health.

N/A

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

WSO Q2-2026 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 Q1 2026, Watsco reported an EPS of $1.87, surpassing estimates by nearly 8%. However, the stock price fell by 4.03% the following day, indicating mixed investor sentiment.

Management Promises & Guidance

Expectations

Wall Street Expectations

Investors are cautiously optimistic about Watsco's upcoming earnings, given its recent EPS beat. However, concerns about revenue growth persist.

Bull Case

If Watsco can demonstrate strong revenue growth and maintain or improve its operating margins, it could lead to a positive market reaction.

Bear Case

On the other hand, if the company fails to meet expectations for revenue or shows signs of declining margins, it could trigger further stock price declines.

Expectations

Two Questions That Matter

The print will turn on these two things.

What is the expected revenue growth rate for Q2 2026?

Revenue growth is critical for assessing Watsco's market position and ability to attract customers in a competitive landscape.

How is Watsco managing its operating margins in the current economic environment?

Operating margins will indicate how well the company is controlling costs and maintaining profitability amid potential economic challenges.

Edge

What the Street Is Missing

Why consensus could be wrong

The Street may underestimate Watsco's ability to capitalize on rising HVAC demand, especially as construction activity picks up.

Supporting Evidence

Recent trends in construction indicate a potential uptick in HVAC installations, which could boost Watsco's revenue.

The options market is pricing a lower move than historical averages, suggesting a potential mispricing of volatility.

Watsco's recent EPS beat may indicate stronger underlying performance than analysts expect.

Key Risk

If revenue growth exceeds 10%, it could challenge the current cautious consensus.

Edge

Thesis-Break Levels

Pre-commit to what would confirm each case.

The core debate this quarter revolves around Watsco's ability to sustain growth and manage costs effectively in a fluctuating market.

Bull Confirmed If

Revenue growth of 10% or more year-over-year would confirm the bull case.

Bear Confirmed If

A decline in operating margins below 15% would support the bear case.

Pre-Earnings Positioning

Options Market

Implied Move

±2.55%

Historical Avg

±5.3%

Pricing cheap

The options market is pricing a modest move in Watsco's stock following the earnings report, suggesting uncertainty among investors.

Options are pricing ±2.5% while WSO has averaged ±5.3% over the last 8 prints — setup is pricing cheap.

Detail

ATM IV

0.4%

30d HV

33.0%

Calls (25K)P/C Ratio: 0.22Puts (4K)

Edge

Historical Setup Match

Cross-company pattern from 30 similar setups.

Prior-quarter beat + options pricing cheap in Industrials

n=30

Fade rate: 6 of 24 (25%)

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 an average of 2.85%, confirming a positive outlook.

In-Line / Cautious

If results are in line but management expresses caution, the stock may see a muted reaction as investors digest the commentary.

Miss

Should the company miss expectations, the average historical reaction indicates a potential decline of around 3.40%, reflecting investor disappointment.

Earnings Track Record

Preparation

What to Listen For

Call Prep

1Any updates on revenue growth projections for the HVAC segment.
2Management's commentary on cost control measures and their impact on margins.
3Insights into customer demand trends in the construction sector.
4Details on any new product offerings or market expansions.
5Responses to competitive pressures in the HVAC distribution market.