Watsco Q3 revenue slightly beats on acquisition boost

Overview

• US HVAC/R distributor's Q3 revenue rose 7%, slightly beating analyst expectations

• Diluted EPS for Q3 fell 5% from prior year

• Revenue growth driven by acquisitions and residential market stabilization; gross margin declined

Outlook

• Company says long-range objectives for sales, margin and cash flow generation remain intact

• Company sees continued improvement in end-market demand and residential unit volume growth

• Company reports further momentum in same-store sales growth early in the fourth quarter

Result Drivers

• ACQUISITIONS - Q3 revenue boosted by Jackson Supply acquisition, which contributed $78 mln in sales, up 16% from prior year

• RESIDENTIAL MARKET - Stabilization and growth in residential equipment sales drove Q3 results, with 7% increase including higher unit volumes and selling prices

• GROSS MARGIN PRESSURE - Q3 gross margin declined due to customer mix, end-market mix, less significant OEM pricing actions and slower growth in non-equipment products

Company press release:

Key Details

*Applies to a deviation of less than 1%; not applicable for per-share numbers.

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 11 "hold" and 2 "sell" or "strong sell"

• The average consensus recommendation for the electrical components & equipment peer group is "buy."

• Wall Street's median 12-month price target for Watsco, Inc. is $350.00, about 14.6% above its October 26 closing price of $305.33

• The stock recently traded at 23 times the next 12-month earnings vs. a P/E of 31 three months ago

Reuters Recommended Reads

• Oct 27 - Ireland's Johnson Controls Q4 sales rise 10%, slightly beat estimates

• Oct 27 - Pentair Q3 sales beat estimates on water solutions growth; reaffirms profit guidance

• Oct 27 - Water solutions firm Xylem Q3 revenue misses on projects timing, cautious spending

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)