WSO

A month has gone by since the last earnings report for Middleby (MIDD). Shares have lost about 10.9% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Middleby due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Middleby reported second-quarter 2026 adjusted earnings of $2.35 per share, beating the Zacks Consensus Estimate of $2.28 by 3.1%. The bottom line increased 6.8% year over year. Net sales of $876 million topped the consensus estimate of $835 million by 4.6% and rose 9.9% year over year. Commercial Foodservice remained the key growth engine, with organic sales up 8.3% on strong U.S. dealer demand and replacement activity. Total revenues and adjusted EBITDA also exceeded management’s guided ranges. Commercial Foodservice sales increased 8.6% year over year to $630.6 million. U.S. and Canada revenues rose 5.9% to $436.8 million, while international sales advanced 15.4% to $193.8 million. Management highlighted QSR sales benefited from new product adoptions and higher replacement demand. The U.S. dealer channel also maintained growth, supported by solid market demand, institutional customers and emerging chains. Global order activity for ice and beverage equipment increased ahead of planned menu expansion in 2026. Food Processing revenues climbed 13.3% year over year to $244.9 million, while organic sales increased 1.3%. U.S. and Canada sales edged up 0.8% to $126 million, whereas international revenues jumped 30.4% to $118.9 million. Adjusted EBITDA for the segment increased 8.6% to $49.8 million. The adjusted EBITDA margin contracted to 20.3% from 21.2% a year earlier. Middleby completed the Food Processing spin-off on July 6, 2026, launching Midera as a standalone public company. Estimated post-spin adjusted earnings for the quarter were $1.74 per share compared with $1.40 a year earlier. Cost of sales increased 12.4% year over year to $540.5 million, while gross profit rose 6% to $335.1 million. Gross margin narrowed 140 basis points to 38.3%. Selling, general and administrative expenses rose 11.3% to $186.6 million. Operating income was nearly flat at $147.7 million, with operating margin declining to 16.9% from 18.6%. Adjusted EBITDA increased 6.4% to $193.2 million, but its margin fell 70 basis points to 22.1% as a less favorable mix, tariffs, inflation and new-product investments pressured profitability. Operating cash flow increased to $99.7 million from $91.8 million in the prior-year quarter. Capital expenditures were $10.7 million, resulting in free cash flow of $89 million compared with $77.2 million in the year-ago quarter.Middleby ended the second quarter with $159.2 million in cash and cash equivalents, down from $222.2 million as of Jan. 3, 2026. Long-term debt declined to $1.94 billion from $2.13 billion. The company repurchased 1.4 million shares during the quarter, representing 2.9% of shares outstanding, and ended the quarter with net leverage of 2.4 times. For the third quarter of 2026, Middleby expects revenues of $620-$640 million, adjusted EBITDA of $143-$150 million and adjusted earnings of $1.67-$1.83 per share. At the midpoints, these imply growth of 4%, 3% and 2%, respectively, from the comparable 2025 period. Management expects continued adoption of new products among chain customers and higher replacement equipment demand. Sequential margin improvement is also anticipated, though inflationary pressures are expected to limit organic gains. Operational initiatives at Taylor and lean-manufacturing investments are expected to support margin expansion. It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -27.87% due to these changes. At this time, Middleby has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Middleby has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months. Middleby is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Watsco (WSO), a stock from the same industry, has gained 0.1%. The company reported its results for the quarter ended June 2026 more than a month ago. Watsco reported revenues of $2.1 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $4.00 for the same period compares with $4.52 a year ago. Watsco is expected to post earnings of $4.15 per share for the current quarter, representing a year-over-year change of +4.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.7%. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Watsco. Also, the stock has a VGM Score of C. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Middleby Corporation (MIDD) : Free Stock Analysis Report Watsco, Inc. (WSO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

It has been about a month since the last earnings report for Watsco (WSO). Shares have added about 0.8% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Watsco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Watsco reported second-quarter 2026 results with earnings and revenues missing the Zacks Consensus Estimate.  Revenues increased year over year, while earnings declined.The earnings shortfall primarily reflected lower gross margins, as unusually favorable OEM pricing actions in the prior-year period created a difficult comparison. Nonetheless, same-store sales improved, supported by better residential HVAC equipment demand. The company reported earnings of $4 per share, down 11.5% from $4.52 a year ago. The figure missed the Zacks Consensus Estimate of $4.38 by 8.7%.Revenues rose 2.1% year over year to $2.10 billion but missed the $2.16 billion consensus by 2.6%. HVAC equipment sales, excluding acquisitions, increased 3% and represented 68% of second-quarter sales. Residential product sales advanced 5%, including a 5% increase in U.S. markets and a 1% gain in international markets. Domestic residential compressor-bearing system volumes rose 2%, while average selling prices increased 2%.Commercial HVAC product sales declined 8%. Other HVAC products, representing 28% of sales, decreased 1%, while commercial refrigeration products, accounting for 4%, increased 19%. Management said the refrigeration increase reflected customer wins at one of its business units, while commercial HVAC weakness was concentrated in variable refrigerant flow products. Gross profit fell 4% year over year to $578.9 million. Gross margin contracted 180 basis points to 27.5% from 29.3%, primarily because 2025 benefited from significant inflationary manufacturer pricing actions, while 2026 pricing returned closer to historical levels.Management described the recent margin range as more consistent with the company's longer-term trend. It maintained its long-term goal of reaching a 30% gross profit margin through operating and technology initiatives. Selling, general and administrative expenses increased 3% to $349 million and rose to 16.6% of revenues from 16.4%. On a same-store basis, SG&A expenses increased 2%, mainly because of higher facilities and transportation costs, partly offset by lower salaries.Operating income declined 12% to $238.4 million, while operating margin fell to 11.3% from 13.2%. The combination of lower gross profit and higher operating expenses outweighed the benefit of lower income taxes. Watsco completed the acquisition of Jackson Supply on June 1. Jackson generated approximately $230.0 million in annual sales in 2025 and operates 25 locations across Texas, Louisiana, Tennessee, Alabama, Mississippi, Oklahoma and Arizona.The transaction helped lift Watsco's network to 723 locations as of June 30, 2026. Management said Jackson's profitability is consistent with Watsco's overall profile and highlighted the acquired company's plans to expand using Watsco's capital, technology and supplier relationships. Watsco ended June 2026 with $364.2 million in cash and cash equivalents, up 24.3% from $293 million a year earlier. The company also held $100 million in short-term cash investments and had no outstanding balance under its $600 million revolving credit agreement.Cash used in operating activities narrowed to $21.4 million in the first half of 2026 from $185.1 million a year earlier. The improvement primarily reflected the timing of vendor payments and a lower increase in inventory, partly offset by higher accounts receivable. Working capital reached $2.37 billion at quarter-end. It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -6.58% due to these changes. At this time, Watsco has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of C on the value side, putting it in the middle 20% for value investors. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Watsco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Watsco, Inc. (WSO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Watsco (WSO) recently reported second quarter and six month 2026 results, with modest sales growth alongside lower net income and earnings per share. International markets, especially Canada and Latin America and the Caribbean, also trailed earlier expectations. See our latest analysis for Watsco. Watsco’s share price has eased in recent months, with a 30 day share price return down 14.9% and a 90 day share price return down 21.7%, while the 5 year total shareholder return of 35.1% shows much slower momentum recently compared with longer term gains. If Watsco’s recent pullback has you reassessing opportunities in the broader market, it can be useful to see what else fits a strong long term story such as 19 top founder-led companies Watsco still appears to be a solid distributor in a critical industry, but the recent share price drop and softer earnings have reset expectations. The key issue now is whether the current valuation reflects that shift or still implies an overly demanding outlook. The most followed narrative on Watsco puts fair value at $410.60, which is comfortably above the last close of $326.71 and frames the recent pullback as a valuation gap rather than a complete reset. Read the complete narrative. Analysts behind this Watsco narrative are not just guessing. They are tying that mix shift, expected revenue growth and rising profit margins into a specific path for future earnings and the valuation multiple needed to support that fair value. The details behind those assumptions are where the real story sits. Result: Fair Value of $410.60 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the Watsco narrative could be knocked off course if tariff costs pressure margins more than expected or if A2L product transitions disrupt inventory and sales. Find out about the key risks to this Watsco narrative. The DCF style narrative points to Watsco trading below an estimated fair value of $410.60, with Simply Wall St’s own DCF work putting future cash flow value at $545.03 per share. By contrast, the current P/E of 28.4x sits above the industry at 27.9x, peers at 26.7x and a fair ratio of 28.1x. That mix of discount on cash flows and premium on earnings leaves an open question: Which signal matters more for you right now. Look into how the SWS DCF model arrives at its fair value. With sentiment on Watsco split between caution and optimism, it makes sense to move quickly and check the data for yourself. To see both the potential upsides and the key concerns in one place, review the 2 key rewards and 1 important warning sign If Watsco has sharpened your focus on quality and valuation, it makes sense to widen your search now and avoid missing other opportunities taking shape. Target potential value opportunities by reviewing companies identified as 51 high quality undervalued stocks that may align with your return and quality preferences. Prioritise resilience and capital protection by scanning 83 resilient stocks with low risk scores so you can focus on stocks with lower overall risk scores. Hunt for lesser known prospects with strong fundamentals through the screener containing 21 high quality undiscovered gems and see which ideas deserve a closer look next. 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. Companies discussed in this article include WSO. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Watsco, Inc.? Here are five stocks we like better. Q2 sales increased 2% to $2.1 billion, with residential HVAC equipment up 5% on stronger volume and pricing. Gross margin fell to 27.5% from 29.3% due to an unusually favorable prior-year comparison, product mix and lower purchasing discounts. Watsco completed its acquisition of Jackson Supply, which contributed approximately $20 million in June revenue and adds about $230 million in annual sales across 25 Sunbelt locations. Management described the broader market as stable, with organic growth of 4% to 5% through July 28. Digital initiatives continued to expand: e-commerce sales rose 13% in the first half and represented 37% of trailing 12-month sales, while OnCall Air generated $1.9 billion in gross merchandise value. The company also remains debt-free, ended the quarter with $464 million in cash and raised its annual dividend 10% to $13.20 per share. Watsco (NYSE:WSO) reported second-quarter sales growth as residential HVAC equipment demand improved, while gross margin declined from an unusually strong prior-year comparison tied to earlier manufacturer pricing actions and product-transition effects. Chairman and Chief Executive Officer Al Nahmad said the company’s operating environment is becoming more conventional after several years marked by pandemic disruptions, supply-chain issues, regulatory transitions and tariff volatility. “Revenue is growing, and a digital ecosystem is producing measurable results,” he said. → Microsoft Just Flipped the AI Spending Narrative Overnight Second-quarter sales rose 2% to $2.1 billion. Residential HVAC equipment, Watsco’s largest product segment, increased 5%, supported by gains in both unit volume and pricing. Operating income was $238 million, producing an operating margin of 11.3%, while earnings were $4.00 per share. Gross profit totaled $579 million, and gross margin was 27.5%, compared with 29.3% in the prior-year quarter. Nahmad said 2025 margins benefited from aggressive original equipment manufacturer pricing actions in response to inflation and tariffs. Pricing actions in 2026 have been more moderate and closer to historical patterns. → 2 Unique Space ETFs That Could Upend the Industry Senior Vice President Barry Logan characterized the prior-year margin result as an anomaly rather than a new baseline. He said gross margin has been in a relatively narrow range over the past 12 months, with 27%-plus representing the company’s expected baseline based on longer-term trends. Logan said equipment sales grew faster than non-equipment sales during the quarter, affecting margin because the categories carry different gross-margin profiles. Lower inventory levels also reduced certain purchasing discounts and rebates, he said, though the company views lower inventory ownership as appropriate as supply conditions normalize. → MarketBeat Week in Review – 07/27- 07/31 Management reiterated its longer-term objective of reaching a 30% gross margin. President A.J. Nahmad said the company is investing in technology, operations and pricing capabilities to support that goal. Watsco ended the quarter with $464 million in cash and no debt. Operating cash flow improved by $168 million during the first six months, which the company attributed to a lower seasonal inventory build. Logan said inventory was about $100 million above what management may have anticipated, equivalent to roughly seven days of inventory, while field inventory was down nearly $200 million. The June 1 acquisition of Jackson Supply added about $60 million of inventory. Nahmad said the company expects inventory turns to gradually improve as manufacturer supply chains become healthier and the A2L product transition moves further into the past. Watsco completed its acquisition of Jackson Supply on June 1. Jackson has approximately $230 million in annual sales and operates from 25 Sunbelt locations. The acquisition contributed roughly $20 million of revenue in June, according to Logan’s calculation during the call. Management described Jackson as an entrepreneurial business with a history of expansion. Logan said the company had doubled from roughly $100 million to $230 million of sales in recent years and has its own goal of doubling again over time. Watsco plans to support Jackson with capital, supplier relationships and technology while allowing its leadership team to continue operating the business. On broader demand, Executive Vice President Paul Johnston said new construction activity has slowed in Florida and Texas, two major Southern markets. He contrasted that weakness with stronger demand in Northern states. Watsco said commercial HVAC was down 8%, driven primarily by a decline in variable refrigerant flow, or VRF, activity during its own A2L transition. Unitary commercial and applied commercial activity were relatively flat, while international business declined by a single-digit percentage. Management said it views the overall market as stable rather than worsening. Logan said the company was seeing 4% to 5% organic growth through July 28, including unit growth. He cautioned that Watsco does not provide formal earnings guidance. A.J. Nahmad said Watsco’s technology investments are intended to improve customer service, increase operational efficiency and help contractors expand their businesses. E-commerce sales rose 13% in the first half and represented 37% of sales over the past 12 months. In some markets, e-commerce penetration reached 60% to 70%. The company’s mobile applications had more than 70,000 monthly active users. Its OnCall Air platform generated more than 340,000 homeowner proposals over the past year, representing $1.9 billion of gross merchandise value, up 15% from the comparable period. Watsco also launched SupplySync.com during the second quarter for larger institutional customers. The company plans to expand the platform over time. Other initiatives include Vendor Consolidation and Rationalization, or VCR, which is focused on strengthening supplier relationships and broadening non-equipment product availability, and Hydros, a shared logistics and distribution program among Watsco business units. Management said digital transactions can increase order line items, often adding accessory products that support margins. The company is also using pricing optimization tools to improve product pricing profiles across markets and customers. Watsco increased its annual dividend by 10% in April to $13.20 per share. Nahmad noted that 2026 marks the company’s 52nd consecutive year of paying dividends. Watsco, Inc is the largest distributor of heating, ventilation, air conditioning and refrigeration (HVAC/R) equipment, parts and supplies in the United States. Headquartered in Miami, Florida, the company operates a network of more than 600 branches across the continental U.S., Canada and Puerto Rico. Watsco serves residential and commercial contractors by providing essential components for climate control systems, including air conditioners, furnaces, heat pumps, coils, refrigerants, controls and electrical and piping supplies. Founded in 1947, Watsco has grown from a single regional distributor into an industry leader through a combination of organic expansion, acquisitions and strategic partnerships with original equipment manufacturers such as Carrier, Trane, Goodman and Lennox. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Watsco Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Jackson Supply Acquisition Adds Density to Key Sunbelt Markets;Entrepreneurial Culture and Debt-Free Balance Sheet Positions Company for Growth MIAMI, July 29, 2026 (GLOBE NEWSWIRE) -- Watsco, Inc. (NYSE: WSO) today announced its operating results for the quarter and six months ended June 30, 2026. Watsco is the largest distributor in the highly fragmented North American HVAC market. Since entering distribution in 1989, Watsco has achieved an 18% compounded annual total shareholder return through a combination of organic growth and the acquisition of more than 70 market-leading businesses. During the second quarter, Watsco closed on the acquisition of Jackson Supply Company, a market-leading HVAC distributor with annualized sales of approximately $230 million across 25 Sunbelt locations. Jackson Supply offers a balanced product offering of HVAC equipment, parts and supplies. Just as importantly, Jackson Supply adds to Watsco’s community of leaders. Watsco maintains a solid balance sheet with $464 million in cash and cash investments and no debt, enabling sustained investments in growth, including the Company’s industry-leading technologies. Today, more than 70,000 contractors and technicians engage digitally, empowering them to adopt and integrate Watsco’s tools into their daily operations. The Company is also introducing AI-driven initiatives to leverage Watsco’s extensive data assets and enrich the customer experience. The Company believes its technology ecosystem represents a durable and widening competitive advantage in the highly fragmented HVAC industry. Second Quarter Operating Performance Revenues increased 2% to $2.1 billion (1% on a same-store basis) Gross profit decreased 4% to $579 million (gross profit margin of 27.5% versus 29.3% last year) SG&A increased 3% to $349 million (16.6% as a percentage of sales versus 16.4% last year) Operating income decreased 12% to $238 million (operating margin of 11.3% versus 13.2% last year) Earnings per share decreased 12% to $4.00 Second Quarter Sales Trends (excluding acquisitions) 3% increase in HVAC equipment sales (68% of sales) 1% decrease in sales of other HVAC products (28% of sales) 19% increase in commercial refrigeration products (4% of sales) Second quarter sales reflect stabilizing end-market demand following last year’s transition to next generation HVAC systems containing A2L refrigerants, which affected virtually all domestic HVAC equipment products sold across 650 domestic locations and impacted our customers’ business as well. Domestic residential HVAC equipment sales increased 5% during the quarter, including 2% growth in unit volume and a 2% increase in average selling prices. With the A2L transition largely complete, the Company is focused on growth with existing customers, acquisition of new customers, improved operating efficiencies and optimizing inventory given a simpler operating environment. Second quarter gross margin was impacted by the timing and magnitude of pricing actions implemented by our primary OEMs in 2025 versus 2026. Pricing actions in 2025 captured substantial inflation and tariffs, resulting in outsized benefits to last year’s gross margin. In contrast, pricing actions for 2026 have normalized, returning to levels more in line with historical trends. The comparative benefit to 2025’s gross margin, along with other A2L transition-related impacts, was approximately 130 basis-points. The Company believes that gross margin thus far in 2026, which were largely consistent with gross margin achieved for the last 12 months ended June 30, 2026, are more representative of underlying market conditions. Albert H. Nahmad, Chairman and CEO said: “Our performance during the second quarter is indicative of improving end-market stability after a busy period of regulatory transitions. We are now operating in a more conventional environment in which Watsco’s scale, OEM relationships, and technology investments can add even more value.” Mr. Nahmad added: “We are excited that Jackson Supply is now officially a member of the Watsco family. It is a legendary company that diversifies and expands our presence in key Sunbelt markets. We look forward to supporting their growth. I am also excited about the recent launch of SupplySync, which we introduced at our investor day last year, and continued progress on the other initiatives that are now active. We believe that Watsco is uniquely positioned for continued growth and success in our industry.” Year to Date Operating Performance Revenues increased 1% to $3.6 billion Gross profit decreased 3% to $1 billion (gross profit margin of 27.7% versus 28.7% last year) SG&A increased 2% to $672 million (18.5% as a percentage of sales versus 18.4% last year) Operating income decreased 9% to $349 million (operating margin of 9.6% versus 10.7 % last year) Earnings per share decreased 9% to $5.92 Cash used in operations of $21 million versus $185 million last year, a $164 million improvement Year to Date Sales Trends (excluding acquisitions) 1% increase in HVAC equipment sales (67% of sales) 1% increase in sales of other HVAC products (29% of sales) 16% increase in commercial refrigeration products (4% of sales) Innovation and Strategic Technology InitiativesThe Company’s continued investment in technology reflects a long-term strategic commitment to building capabilities that strengthen customer relationships, improve operating efficiency and support sustainable growth. Watsco has invested more than $250 million in its digital platforms over the last five years, at a current annual run rate of approximately $68 million, and the breadth of that investment spans across the customer-engagement, internal platforms to increase the speed and efficiency of our locations and emerging AI capabilities that help customers grow and deliver technical know-how quicker. Watsco’s HVAC Pro+ Mobile Apps and E-Commerce platform have transformed the customer-experience by providing contractors with a seamless digital experience, including sourcing products, accessing technical help, real-time inventory, pricing, product information and more. These tools empower 24/7 self-service that benefit from advanced analytics, AI, technical knowledge and product recommendations. The result is a frictionless buying journey, increased convenience and higher customer satisfaction, which drives greater loyalty and repeat business with lower costs to serve.Thus far in 2026: OnCallAir® is Watsco’s digital sales platform enabling contractors to engage, present and quote solutions to homeowners. The gross merchandise value (GMV) of products sold through OnCallAir® reached $1 billion for the first six months of 2026, a 14% increase over the same period last year. For the twelve months ended June 30, 2026, contractors presented quotes to approximately 342,000 households and generated $1.9 billion GMV, a 15% increase versus the prior comparable twelve-month period. A.J. Nahmad, Watsco’s President, added: “Our technology platforms have continued to scale and deepen their impact for our customers. We believe that the growth in e-commerce, OnCallAir® and overall digital engagement across our network reflects the value these tools deliver to our customers every day. We have also progressed nicely with the various initiatives introduced at our investor day, including the formal launch of SupplySync and the scaling of the other initiatives announced. Our focus remains advancing these unique capabilities – with AI enabling better and faster speed to market – in ways that help our customers grow.” Buy & Build Acquisition StrategyThe Company acquired Jackson Supply in June 2026. Jackson Supply is among largest Sunbelt HVAC distributors, serving approximately 5,000 customers from 25 locations in several high-growth Sunbelt markets. The Company continues to actively seek new businesses that will join the Watsco family. Watsco has acquired 13 companies in recent years that today represent approximately $1.8 billion in annualized sales and 145 locations. Our “buy and build” strategy builds upon their long-standing legacies through investment in new locations, new products and by leveraging Watsco’s technology platforms. The North American distribution market remains highly fragmented with more than 2,100 HVAC distributors. Cash Flow, Dividends, Financial Strength and LiquidityOperating cash flow was a cash-use of $21 million for the six-month period ended June 30, 2026, reflecting the customary seasonal buildup of working capital, compared to a cash-use of $185 million for the same period in 2025, a $164 million improvement. The Company expects more conventional supply-chain trends for the remainder of 2026, providing the opportunity for better inventory turns and enhanced returns on invested capital. In April 2026, the Company increased its annual cash dividend by 10% to $13.20 per share. Watsco has paid dividends to shareholders for 52 consecutive years. The Company’s philosophy is to share cash flow through dividends while maintaining a conservative balance sheet with continued capacity to build its distribution network. Future changes in dividends are considered in light of investment opportunities, cash flow, general economic conditions and Watsco’s overall financial condition. The Company’s objective is to maintain a healthy balance sheet that provides low-cost capital to fund strategic growth investments. This strong financial position has been key to our ability to deliver sustained long-term returns, enabling investments regardless of macroeconomic or industry conditions. The Company’s stated goal is to generate annual operating cash flow in excess of net income. Use of Non-GAAP Financial Information In this release, the Company discloses non-GAAP measures on a “same-store basis”, which exclude the effects of locations closed, acquired, or locations opened, in each case during the immediately preceding 12 months, unless such locations are within close geographical proximity to existing locations. The Company believes that this information provides greater comparability regarding its ongoing operating performance. These measures should not be considered an alternative to measurements presented in accordance with U.S. GAAP. Second Quarter Earnings Conference Call InformationDate and time: July 29, 2026 at 10:00 a.m. (EDT)Webcast: http://investors.watsco.com (a replay will be available on the Company’s website)Dial-in number: United States (844) 883-3908 / International (412) 317-9254 About WatscoWatsco is the largest distributor in the highly fragmented North American HVAC/R market. Watsco’s solid financial position and culture of innovation has enabled investments in long-term growth, including the Company’s industry-leading technology platforms. Today, more than 70,000 contractors, installers and technicians engage digitally with the Company, resulting in improved growth and lower attrition. The Company is now advancing AI-driven initiatives to leverage its extensive data assets to enhance the customer experience and improve efficiencies. These investments position Watsco to capture market share as contractors increasingly adopt digital tools and incorporate data-driven solutions in their businesses. This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, our expected financial and operational results and the related assumptions underlying our expected results. These forward-looking statements are distinguished by use of words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms, and similar references to future periods. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive market, new housing starts and completions, capital spending in commercial construction, consumer spending and debt levels, regulatory and other factors, including, without limitation, the effects of supplier concentration, competitive conditions within Watsco’s industry, the seasonal nature of sales of Watsco’s products, the ability of the Company to expand its business, insurance coverage risks and final GAAP adjustments. Detailed information about these factors and additional important factors can be found in the documents that Watsco files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. Watsco assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as required by applicable law. Barry S. LoganExecutive Vice President(305) 714-4102e-mail: [email protected]

Watsco (WSO) came out with quarterly earnings of $4 per share, missing the Zacks Consensus Estimate of $4.38 per share. This compares to earnings of $4.52 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -8.68%. A quarter ago, it was expected that this heating and cooling company would post earnings of $1.73 per share when it actually produced earnings of $1.87, delivering a surprise of +8.09%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Watsco, which belongs to the Zacks Manufacturing - General Industrial industry, posted revenues of $2.1 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 2.56%. This compares to year-ago revenues of $2.06 billion. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Watsco shares have added about 9.1% since the beginning of the year versus the S&P 500's gain of 8.5%. While Watsco has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Watsco was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $4.44 on $2.22 billion in revenues for the coming quarter and $12.90 on $7.61 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - General Industrial is currently in the top 21% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, RBC Bearings (RBC), has yet to report results for the quarter ended June 2026. The results are expected to be released on July 31. This maker of bearings and components is expected to post quarterly earnings of $3.42 per share in its upcoming report, which represents a year-over-year change of +20.4%. The consensus EPS estimate for the quarter has been revised 1.6% higher over the last 30 days to the current level. RBC Bearings' revenues are expected to be $508.64 million, up 16.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Watsco, Inc. (WSO) : Free Stock Analysis Report RBC Bearings Incorporated (RBC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Revenue: Increased 2% to $2.1 billion. Gross Profit: $579 million with a gross margin of 27.5% versus 29.3% last year. Operating Income: $238 million with an operating margin of 11.3%. Earnings Per Share (EPS): $4 per share. Cash and Debt: Ended the quarter with $464 million in cash and no debt. Operating Cash Flow: Improved by $168 million for the six-month period. Dividend: Annual dividend increased by 10% to $13.20 per share. Residential HVAC Equipment Sales: Grew 5% during the quarter. E-commerce Sales: Grew 13%, reaching 37% of total sales over the last 12 months. Jackson Supply Acquisition: $230 million in annual sales from 25 Sunbelt locations. Warning! GuruFocus has detected 3 Warning Signs with WSO. Is WSO fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Watsco Inc (NYSE:WSO) reported a 5% growth in residential HVAC equipment during the quarter, indicating strong performance in its largest product segment. The acquisition of Jackson Supply, with $230 million in annual sales, is expected to enhance Watsco's market presence and growth potential. E-commerce sales grew by 13%, with penetration reaching 37% of total sales, showcasing the success of Watsco's digital initiatives. Watsco ended the quarter with $464 million in cash and no debt, maintaining a strong balance sheet for future investments. The company increased its annual dividend by 10% to $13.20 per share, marking the 52nd consecutive year of dividend payments, reflecting a commitment to shareholder returns. Gross margin decreased to 27.5% from 29.3% last year, impacted by more moderate OEM pricing actions compared to the previous year. SG&A expenses increased by 2%, partly due to continued technology investments and the addition of Jackson Supply. There is a noted slowdown in new construction in key southern states like Florida and Texas, which could impact future sales. The commercial segment, particularly VRF, experienced an 8% decline, attributed to transitions and disruptions. Inventory levels were higher than anticipated, with a $100 million excess, which could affect future purchasing and cost management. Q: Al, you mentioned that gross margins have normalized to historical levels. Can you elaborate on what this means? A: Barry Logan, Executive Vice President, explained that the trend line over the last few years shows margins at 27% plus, which is expected to continue. Last year's anomaly at 29% was due to unique factors, and the current 27.5% margin is more reflective of historical norms. The company aims for a long-term goal of 30% gross margins. Q: Are you seeing a slowdown in new construction in the southern states, and how is it impacting your business? A: Paul Johnston, Executive Vice President, confirmed a slowdown in new construction, particularly in Florida and Texas. However, there is strength in northern states, indicating regional variations in market conditions. Q: How has OEM pricing in 2026 compared to historical trends, and what was the realized ASP growth in the quarter? A: Barry Logan noted that OEM pricing has normalized to historical levels, with a 2% price increase on units. This is consistent with long-term averages, and the realized ASP growth aligns with these conventional levels. Q: Can you provide insights into the inventory levels and their impact on the business? A: Barry Logan stated that inventory levels are about $100 million higher than expected, partly due to the Jackson Supply acquisition. The company aims to maintain inventory readiness while reducing overall inventory levels compared to the previous year. Q: What are the current market conditions, and do you expect volume growth in the second half of the year? A: Barry Logan indicated that the market is stable, with expectations of 4% to 5% organic growth in July. The company anticipates unit growth in the third quarter, supported by the Jackson Supply acquisition. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Equipment distributor Watsco (NYSE:WSO) will be reporting earnings this Wednesday before the bell. Here’s what to look for. Watsco beat analysts’ revenue expectations last quarter, reporting revenues of $1.53 billion, flat year on year. It was an exceptional quarter for the company, with a beat of analysts’ EPS estimates. Is Watsco a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members. This quarter, the market is expecting Watsco’s revenue to grow 4% year on year, a reversal from the 3.6% decrease it recorded in the same quarter last year. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Watsco has missed Wall Street’s revenue estimates multiple times over the last two years. Looking at Watsco’s peers in the industrial distributors segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Richardson Electronics delivered year-on-year revenue growth of 27.6%, beating analysts’ expectations by 19.6%, and United Rentals reported revenues up 11.8%, topping estimates by 4.9%. Richardson Electronics traded up 21.2% following the results while United Rentals was also up 10.1%. Read our full analysis of Richardson Electronics’s results here and United Rentals’s results here. Over the past year, investors have repeatedly shifted their focus from one macro narrative to another (AI disruption and AI capex spending to geopolitics, interest rates, and the broader health of the economy). While some of the industrial distributors stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 3.3% on average over the last month. Watsco is down 11.3% during the same time and is heading into earnings with an average analyst price target of $428.70 (compared to the current share price of $364.20). ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE.

Ingersoll Rand (IR) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The earnings report, which is expected to be released on July 30, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This maker of flow control and compression equipment is expected to post quarterly earnings of $0.83 per share in its upcoming report, which represents a year-over-year change of +3.8%. Revenues are expected to be $1.96 billion, up 3.8% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.57% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Ingersoll, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +0.61%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination indicates that Ingersoll will most likely beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Ingersoll would post earnings of $0.74 per share when it actually produced earnings of $0.77, delivering a surprise of +4.05%. Over the last four quarters, the company has beaten consensus EPS estimates two times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Ingersoll appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Among the stocks in the Zacks Manufacturing - General Industrial industry, Watsco (WSO), is soon expected to post earnings of $4.38 per share for the quarter ended June 2026. This estimate indicates a year-over-year change of -3.1%. This quarter's revenue is expected to be $2.17 billion, up 5.3% from the year-ago quarter. Over the last 30 days, the consensus EPS estimate for Watsco has been revised 0.9% up to the current level. Nevertheless, the company now has an Earnings ESP of +1.32%, reflecting a higher Most Accurate Estimate. This Earnings ESP, combined with its Zacks Rank #2 (Buy), suggests that Watsco will most likely beat the consensus EPS estimate. Over the last four quarters, the company surpassed EPS estimates just once. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ingersoll Rand Inc. (IR) : Free Stock Analysis Report Watsco, Inc. (WSO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research