Watsco, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Watsco, Inc. (NYSE:WSO) just released its latest quarterly report and things are not looking great. Results look to have been somewhat negative - revenue fell 3.3% short of analyst estimates at US$2.1b, and statutory earnings of US$3.98 per share missed forecasts by 7.3%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the consensus forecast from Watsco's 14 analysts is for revenues of US$7.60b in 2026. This reflects a satisfactory 2.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 4.1% to US$13.38. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.64b and earnings per share (EPS) of US$13.54 in 2026. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

Check out our latest analysis for Watsco

The analysts reconfirmed their price target of US$408, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Watsco, with the most bullish analyst valuing it at US$460 and the most bearish at US$360 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Watsco is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Watsco's past performance and to peers in the same industry. We would highlight that Watsco's revenue growth is expected to slow, with the forecast 2.0% annualised growth rate until the end of 2026 being well below the historical 7.5% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Watsco.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Watsco going out to 2027, and you can see them free on our platform here.

We also provide an overview of the Watsco Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.