| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 45 | 26.8x | 17.8x | Around median | |
Growth | 36 | -3.0% | 7.1% | Bottom tier | |
Quality | 73 | 14.1% | 4.5% | Top tier | |
Safety | 86 | 0.9x | 2.6x | Top tier | |
Capital Return | 69 | 3.72% | 2.12% | Top tier | |
Momentum | 16 | -20.5% | 2.9% | Bottom tier | |
Sentiment | 88 | 7 | 3 | Top tier |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Watsco operates as a distributor of heating, ventilation, and air conditioning HVAC equipment, parts, supplies, and commercial refrigeration products, serving contractors and technicians through a network of 650 local locations. Its business mix consists of approximately 70% equipment and 30% non-equipment products, and it offers 26 brands, allowing it to serve multiple price points. Its growth strategy also relies on expanding the network and acquiring regional distributors, alongside increasing digital sales and improving pricing, inventory, and logistics.
In fiscal Q2 2026, revenue increased 2% to $2.1 billion, while comparable sales reached 1%, and residential HVAC equipment grew 5% due to higher unit volumes and prices. Gross profit was $579 million, but its margin declined to 27.5% from 29.3% a year earlier, and operating income was $238 million at an operating margin of 11.3%, while earnings per share reached $4. The acquisition of Jackson Supply contributed approximately $20 million in revenue during June 2026, while Watsco ended the quarter with $464 million in liquidity and no debt.
Automated analysis for informational purposes only — not investment advice.
The average analyst price target is $405, compared with a wide target range of $330 to $485 and a neutral consensus across buy, hold, and sell ratings. The average is approximately 11.8% below the 52-week range high of $459 and approximately 36.9% above its low of $295.75, while the highest target exceeds the annual high, and the substantial variation among targets reflects continued disagreement over the pace of demand recovery and the potential for margin improvement.
Figures in the text are as of 2026-08-29; the live price is shown at the top of the page.
Revenue increased 2% to $2.1 billion, and comparable sales reached 1%. Gross profit reached $579 million and operating income reached $238 million, with earnings per share of $4. Gross margin was 27.5% and operating margin was 11.3%, while residential HVAC equipment grew 5%.
The margin declined to 27.5% in fiscal Q2 2026, compared with 29.3% a year earlier. Management attributed approximately 130 basis points of the decline to the comparison with strong pricing actions and the A2L transition in 2025, while manufacturer pricing in 2026 was more moderate. Equipment growing faster than non-equipment products also created pressure, alongside lower inventory purchases and the associated discounts and incentives.
Watsco closed the transaction on June 1, 2026, and Jackson Supply generates $230 million in annual sales across 25 locations in the Sunbelt region. Jackson added approximately $20 million to Watsco's revenue during June 2026, and management described its profitability as consistent with Watsco's overall level. The Jackson team aims to double the business by leveraging Watsco's capital, relationships, and technology platforms while maintaining its current operational management.
E-commerce sales increased 13% in the first half of fiscal 2026 and reached 37% of total sales during the twelve months ended fiscal Q2 2026. The company's applications exceeded 70 thousand monthly active users. OnCallAir also supported more than 340 thousand proposals representing $1.9 billion in gross merchandise value and 15% growth during the same period.
Residential HVAC equipment grew 5% in fiscal Q2 2026, with increases in volume and price, and the company recorded organic growth of between 4% and 5% during the period from July 1 to 28, 2026. In contrast, new construction remained weak in Florida and Texas, and commercial activities declined 8% due to weakness in VRF related to the A2L transition. Management believes the market stabilized after unit volumes declined 17% during 2025, but consumers continue to face affordability pressures for repairs and replacements.
Watsco ended fiscal Q2 2026 with $464 million in liquidity and no debt. Operating cash flow improved by $168 million during the first half, with a reduced need to build seasonal inventory, although inventory was approximately $100 million above management's estimates and included approximately $60 million from Jackson Supply. In April 2026, the company increased its annual dividend 10% to $13.20 per share, making 2026 the fifty-second consecutive year of dividend payments.
