Watsco Stock Drops After Missing Earnings Expectations
On July 29, 2026, Watsco (NYSE: WSO) stock fell by over 15% after the HVAC equipment distributor reported earnings that missed analyst expectations. The company earned $4 per share on sales just below forecasts of more than $2.1 billion for Q2. Watsco's performance was weighed down by slow revenue growth—only 2% year-over-year—and declining gross profits amid rising operating costs, which led to a 12% drop in earnings compared to the previous year. The company is attempting to drive growth through acquisitions, having recently purchased Jackson Supply and continuing its search for new businesses. Despite strong free cash flow of nearly $700 million over the past 12 months, Watsco's stock appears overvalued at around 20 times FCF given modest growth. The Motley Fool analyst team does not currently recommend buying the stock.
Topics: Earnings HVAC Industry Stock Performance