Watsco, Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
Watsco is deeply oversold at $282.65 with an RSI of 28.57, trading roughly 24% below its 200-day moving average of $370.88, yet the fundamental picture is inflecting positively — Q2 2026 revenue grew 2.1% YoY to $2.10B after multiple quarters of decline, and the pending Granite Group acquisition adds approximately $500M in sales with plumbing diversification.
At 24.4x earnings WSO trades in line with the peer median PE of 24.5x and at a 41% discount to the peer median PS of 2.73x, while the $3.30 quarterly dividend (52 consecutive years) and $535M FY2025 free cash flow on a lightly levered balance sheet ($479M debt against $2.78B equity) provide a strong floor. The core risk is that EPS compression persists — Q2 2026 EPS of $4.05 fell short of the prior year's $4.52 — but the combination of technical oversold conditions, revenue stabilization, and compressed valuation makes the risk/reward attractive.
What could go wrong
- Margin compression continues. FY2025 operating margin fell to 9.6% from 10.3% in FY2024 and 11.4% in FY2022, and EPS has declined for three consecutive years from $15.41 in FY2022 to $12.25 in FY2025.
- Persistent estimate misses. WSO missed consensus EPS estimates in four of the last six quarters, including Q2 2026 where actual EPS of $4.00 fell 9.3% below the $4.41 estimate.
- Integration risk from Granite Group. The Granite Group acquisition adds ~$500M in sales across seven Northeast states, but integration costs and execution risk could pressure margins further in the near term.
- Net insider selling. Over the trailing 24 months insiders have been net sellers of approximately 15,298 shares worth $7.6M, with no cluster buying signals.
What would change my mind
Where this comes from: technicals, 7 Oct · Q2 2026 results · Q2 2026 and Q2 2025 results · peer comparison. Orin's read on WSO; not advice.
How has the share price moved?
Down 17.4% over twelve months, from $364.37 on 27 Oct 2025 to $301.04 at the Tue 27 Oct 2026 close. Its highest close in that time was $456.86 on 27 Apr 2026; the last close is 34.1% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 2.0M, on 29 Jul 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
On file
All WSO filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $1.7B | 0.0% |
| Capital Research Global Investors | $792.7M | 0.1% |
| Vanguard Portfolio Management | $737.8M | 0.0% |
| FMR | $710.6M | 0.0% |
| Vanguard Capital Management | $658.1M | 0.0% |
| Charles Schwab Investment Management | $607.9M | 0.1% |
| State Street | $551.3M | 0.0% |
| Morgan Stanley | $376.1M | 0.0% |
| Geode Capital Management | $274.2M | 0.0% |
| Wells Fargo | $166.2M | 0.0% |
82 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 36 Form 4 filings; open-market trades net −$7.6M. Of the 36 on hand, 0 were open-market purchases and 4 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about WSO
Orin answers questions about WSO from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 26.5× its last 12 months of profit (Tue 27 Oct close) — higher than in 1 of its last 5 fiscal years (middle 28.9×); the typical Industrials company on the NYSE is at 33.7×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 26.5×below usual | 28.9× | 33.7× |
| P/S | 1.69×near usual | 1.76× | — |
| EV/EBITDA | 17.0×near usual | 17.2× | — |
| P/B | 3.8×below usual | 6.6× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $386 (from $330 to $485) — 28% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$386
$330 – $485 · +28% against the last close
- 2 buy or overweight
- 6 hold
- 0 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 26.5× its last 12 months of profit. Only 2 of the 2 companies it is compared to made a profit (CARR 39.8×, LII 16.8×), so there is no typical P/E.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| WSOWatsco, Inc. | $13B | 26.5× | 17.0× | 27.2% | 6.3% | 16% |
| CARRCarrier Global Corporation | $48B | 39.8× | 19.2× | 24.3% | 5.5% | 9% |
| LIILennox International Inc. | $13B | 16.8× | 13.0× | 33.1% | 14.6% | 65% |
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 26.5× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now26.5×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Industrials companies on the NYSE were priced at a typical 33.7× their yearly profit (Tue 27 Oct close).
- Now33.7×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $197 a share — 33% below the $295.29 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $197 | 33% below $295.29 |
| Levered | $231 | 22% below $295.29 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.