Watsco, Inc. (NYSE: WSO) is a leading player in the North American HVAC market, known for its distribution of air conditioning, heating, and refrigeration equipment. The company boasts a strong financial foundation, with over $640 million in cash and investments and no debt. This stability supports its growth initiatives, including investments in technology platforms that serve over 72,000 contractors and technicians.
On October 29, 2025, Watsco reported earnings per share (EPS) of $3.98, missing the estimated $4.44. This represents a 5.46% negative surprise compared to the Zacks Consensus Estimate of $4.21. The EPS also decreased from $4.22 in the same quarter last year, highlighting a challenging period for the company.
Watsco's revenue for the third quarter of 2025 was $2.07 billion, falling short of the estimated $2.17 billion and marking a 2.21% miss against the Zacks Consensus Estimate. This is a decline from the $2.16 billion reported in the same period last year. Despite these challenges, Watsco has only surpassed consensus revenue estimates once in the last four quarters.
Despite the earnings and revenue shortfalls, Watsco maintains a strong market position with a price-to-earnings (P/E) ratio of 26.52 and a price-to-sales ratio of 2.01. The company's enterprise value to sales ratio is also 2.01, indicating a stable valuation relative to its sales. Watsco's low debt-to-equity ratio of 0.10 and a robust current ratio of 3.84 further underscore its financial health.
Watsco's ability to generate cash flow is reflected in its enterprise value to operating cash flow ratio of 27.23. The company's earnings yield stands at 3.77%, providing insight into the return on investment. These metrics, combined with its strategic acquisitions and organic growth, have contributed to an 18% compounded annual total-shareholder return since 1989.
