moneyheap
WSO · Analysis updated Nov 10, 2026, 6:00 PM ET
Why is Watsco, Inc. (WSO) stock moving?
Watsco reported record Q3 sales on Oct 27, and management expects the Jackson Supply and Granite Group acquisitions to add about 10% to annual revenue. The stock gapped down to a $280.18 open that day, on volume of 1.53M shares, before recovering to close at $301.04. Baird kept its Buy rating but trimmed its target from $360 to $350, which is still about 12% above the $311.47 close on Nov 10. Since the earnings reaction the shares have traded in a $300-$320 band on falling volume, roughly 0.5-0.8M shares a day versus the 1.5M spike, and they remain below the $330.65 high of Oct 22. The new $750.0M five-year credit facility, with $69.7M drawn at closing, adds liquidity for further acquisitions. The provided extract does not include the Q3 financial details or the 10-Q, so the earnings quality and margin trends cannot be checked.
News behind the analysis
- Robert W. Baird Analyst Adjusts Watsco Price TargetBaird's David Manthey kept a Buy rating on Watsco but cut the price target from $360 to $350.
- Watsco Reports Record Third Quarter Sales, Strong Cash Flow and Improving DemandWatsco reported record Q3 sales and said the Jackson Supply and Granite Group acquisitions should add about 10% to annual revenue. The company also cited a solid balance sheet and continued technology investment.
- Watsco enters $750.0 million unsecured five-year credit agreementThe new facility, dated Oct 21, replaces the $600.0 million revolver, and Watsco borrowed $69.7 million at closing to repay the old facility.
- Quarterly report (Form 10-Q)Watsco filed its quarterly report on Nov 6. The contents were not included in the provided extract, so no figures are drawn from it.
About Watsco, Inc.
Watsco is the largest distributor of heating, ventilation, air conditioning and refrigeration (HVAC/R) equipment, parts and supplies in North America. It has roughly 800 locations, mostly in the US Sunbelt, and grows by buying regional distributors, recently Jackson Supply and The Granite Group in 2026, while letting their local managers keep running them. It also runs an e-commerce and digital platform that over 70,000 contractors use.
How it makes money
Watsco buys HVAC equipment from manufacturers such as Carrier, Daikin and Trane, then resells it, along with parts and supplies, to contractors who install and repair systems in homes and businesses. Most sales come from replacing residential air conditioners and furnaces, with smaller amounts from new construction and commercial jobs. Equipment makes up roughly two-thirds of sales, and parts and supplies account for the rest. Gross margins are usually around 26–28%. Sales come to roughly $7–8 billion a year (approximate), and the company has historically paid out a large share of earnings as dividends.
What usually moves WSO
- Summer heat and seasonal demand for AC replacement
- Housing turnover and new home construction
- Manufacturer price increases and refrigerant regulation changes
- Acquisitions of regional distributors
- Consumer spending and interest rates