Watsco Q4 revenue misses expectations; dividend raised 10%

Overview

• HVAC distributor's Q4 revenue missed analyst expectations

• EPS for Q4 was $1.68, no analyst comparison available

• Company boosts annual dividend 10% to $13.20 per share

Outlook

• Watsco expects a more conventional industry environment and better growth prospects in 2026

• Company aims to optimize inventory and improve operating efficiency in 2026

• Watsco plans to enhance growth with AI-driven initiatives and technology platforms

Result Drivers

• A2L TRANSITION - Revenue decline due to lower HVAC equipment volumes, offset by higher selling prices post-A2L transition

• MARGIN IMPROVEMENT - Gross profit margin expanded due to pricing optimization technologies and OEM pricing actions

• TECHNOLOGY INVESTMENTS - Strategic investments in technology and digital platforms to enhance customer experience and efficiency

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 13 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the electrical components & equipment peer group is "buy."

• Wall Street's median 12-month price target for Watsco Inc is $382.00, about 8.6% below its February 13 closing price of $417.92

• The stock recently traded at 32 times the next 12-month earnings vs. a P/E of 28 three months ago

Press Release: ID:nGNX9Lgj8S

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