Watsco Q2 revenue up 2%; expects conventional supply-chain trends for 2026

Overview

• US HVAC distributor's Q2 revenue rose 2% but missed analyst expectations

• Q2 adjusted EPS fell 12% to $4.00

• Company completed acquisition of Jackson Supply, expanding Sunbelt market presence

Outlook

• Company expects more conventional supply-chain trends for remainder of 2026

• Watsco says stabilizing end-market demand following regulatory transitions

Result Drivers

• A2L TRANSITION COMPLETION - Co said end-market demand stabilized after last year's transition to A2L refrigerants, which had affected domestic HVAC equipment sales

• GROSS MARGIN NORMALIZATION - Gross margin declined due to normalized OEM pricing actions in 2026 compared to outsized benefits from inflation and tariffs in 2025

• JACKSON SUPPLY ACQUISITION - Acquisition of Jackson Supply expanded presence in key Sunbelt markets and diversified product offering

Company press release: ID:nGNX68p2Zf

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 12 "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 $420.00, about 14.3% above its July 28 closing price of $367.51

• The stock recently traded at 27 times the next 12-month earnings vs. a P/E of 28 three months ago

Reuters Recommended Reads

• July 29 - Lennox Q2 revenue slightly misses estimates on residential weakness; cuts EPS guidance

• July 28 - Carrier Q2 revenue rises on Climate Solutions Americas segment growth

• July 27 - France's Rexel H1 sales rise, EBITA margin improves on volume and price gains

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(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.)