Watsco

Watsco is the largest distributor of heating, ventilation and air conditioning (HVAC) equipment in North America. It buys equipment, parts and supplies from manufacturers and sells them to contractors, who install and repair systems in homes and buildings. It has 804 locations in the United States, Canada and other countries, and 112 of them also sell plumbing products. HVAC equipment gave 67% of sales in Q3 2026, other HVAC products 29%, and commercial refrigeration 4%.

Most of its sales replace old systems in existing homes, so demand depends more on hot weather and on homeowners than on new construction. Carrier is its largest supplier, with 64% of purchases in Q2 2026, and Carrier owns minority stakes in Watsco's Carrier Enterprise joint ventures. Watsco grows by buying smaller distributors, and it sells more and more through its own e-commerce and mobile apps.

The market prices Watsco for lower profits after two strong years. In 2025, equipment makers raised prices sharply for inflation and tariffs, and the change to new A2L refrigerants also helped margins. In 2026, these price increases returned to normal. In Q3 2026, gross margin fell to 26.4% from 27.5%, operating income fell 4%, and EPS fell 5% to $3.77.

Residential equipment sales grew 7%, with 5% more units, but commercial equipment sales fell 5%. Investors doubt that unit growth can make up for the lower margins. For the gap to close, Watsco must show that profit has stopped falling. Gross margin must stop falling from a year earlier, residential unit volume must keep growing, and operating income must grow from a year earlier by early 2027.

The Jackson Supply and Granite Group purchases, which together add about $730 million of yearly sales, must also add to earnings. The Q3 2026 report showed volume growth but a lower margin. The Q4 report in early 2027 and the price increases of the equipment makers for 2027 give the next tests. If margins hold and volume grows, the gap can close over the next four to six quarters.

1. Oct 27, 2026Failed

   Q3 2026 results: gross margin and unit volumeGross margin near 27.5% or higher with growth in residential unit volume passes; gross margin clearly below 27% or a fall in residential unit volume fails.Outcome: Residential unit volume grew 5%, but gross margin fell to 26.4% from 27.5% a year earlier.
2. Jan 27, 2027 · est.Pending

   Q4 2026 results and first Granite Group quarterOperating income that grows from a year earlier with Granite Group added passes; another fall in operating income fails.
3. Q2 2027 · est.Pending

   2027 equipment price increases and selling seasonPrice increases near the historical trend with stable gross margin in Q1 and Q2 2027 pass; flat prices with lower margin fail.

Every passed and failed checkpoint across all picks

• October 27, 2026Watsco reported Q3 2026 results. Revenue grew 7% to a record $2.22 billion, or 4% on a same-store basis. Gross margin fell to 26.4% from 27.5%, operating income fell 4% to $225 million, and EPS fell 5% to $3.77. Residential equipment sales grew 7%, with 5% more units. Watsco said that sales growth improved through the season and into the fourth quarter.
• October 21, 2026Watsco signed a new five-year $750 million unsecured revolving credit facility. It replaces the $600 million facility of 2023. Watsco borrowed $69.7 million under the new facility to repay the borrowings under the old one.
• October 9, 2026Watsco closed the purchase of Granite Group, a distributor of plumbing and HVAC products in seven Northeast states with about $500 million of yearly sales. It paid $505.0 million, 80% in cash and 20% in 338,176 new Watsco shares. On the same day, Watsco said it will report Q3 2026 results before the market opens on October 27, 2026.

Last earnings

October 27, 2026 (8-K on sec.gov)

Next earnings

Expected about January 27, 2027. The company has not confirmed the date.

• 10-QQuarterly report for the period ended Sep 30, 2026Filed November 6, 2026 · wso-20260930
• 8-KNew material agreement and End of a material agreementFiled October 27, 2026 · wso-20261021
• 8-KEarnings release and Investor disclosureFiled October 27, 2026 · Press release and exhibits
• 8-KCurrent reportFiled October 14, 2026 · wso-20261014
• 8-KCurrent reportFiled September 17, 2026 · wso-20260912
• 10-QQuarterly report for the period ended Jun 30, 2026Filed August 7, 2026 · wso-20260630
• 8-KEarnings release and Investor disclosureFiled July 29, 2026 · Press release and exhibits
• 8-KCurrent reportFiled June 4, 2026 · wso-20260604
• 8-KShareholder vote resultsFiled June 3, 2026 · wso-20260601
• 10-QQuarterly report for the period ended Mar 31, 2026Filed May 8, 2026 · wso-20260331

Every filing on SEC EDGAR (CIK 105016)

• Gross margin depends on the price increases of equipment makers. These increases were large in 2025 and returned to normal in 2026. If prices stay flat or fall while costs rise, profit can fall more.
• Demand depends on homeowners who replace old systems and on new home building. High interest rates and weak consumers can delay replacements or move them to repairs. Commercial equipment sales fell 5% in Q3 2026.
• Carrier supplied 64% of Watsco's purchases in Q2 2026 and owns stakes in its main joint ventures. A change in Carrier's strategy, prices or products affects Watsco directly.
• Granite Group adds plumbing products in the Northeast, a new product line and region for Watsco. Tariffs on metals and imported parts can also raise equipment prices and slow demand.

Watsco had no debt on its balance sheet at September 30, 2026. It had $498.7 million of cash and $150.0 million of short-term cash investments. Read more

Yield at the current rate

4.2% (current annual rate, at today’s price)

Dividend yield

4.1% (last 12 months, at today’s price of $313.15)

Paid per share

$12.90 in the last 12 months (4 payments)

Current annual rate

$13.20 ($3.30 × 4 a year)

Payout ratio

96% of the last fiscal year’s earnings (the year that ended December 31, 2025)

Latest ex-dividend date

October 16, 2026, $3.30 per share

Dividends per share by year

From 2020 to 2025, the dividend grew by about 11.1% a year. From 2015 to 2025, the dividend grew by about 15.4% a year.

Source: company filings and market data, read on November 13, 2026. The ex-dividend date is the first day a buyer no longer gets the next payment.