Watsco Q2 Earnings Miss as Margins Slip; Jackson Supply Acquired for $186M
WSO is trading near its 52-week low of $300.66 (9.8% above the low).
Summary
Watsco's Q2 2026 EPS of $4.00 missed estimates as gross margin fell to 27.5%. The company acquired Jackson Supply for $186M in stock and disclosed a legal fight with Gree over distribution rights.
Key Events · Earnings and Guidance · WSO
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Q2 Earnings Miss
EPS of $4.00, down 12% YoY, on revenue of $2.1B (+2%). Gross margin fell 180 bps to 27.5% due to pass-through of 2025 OEM price hikes.
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Jackson Supply Acquisition
Acquired June 1, 2026 for 517,884 shares of common stock valued at $186.2M. Adds $230M in annual sales and 25 locations across the Sunbelt.
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Gree Distribution Dispute
Gree filed a declaratory judgment action in March 2026 seeking to terminate the exclusive distribution agreement. Watsco counterclaimed for renewal. Less than 3% of revenue is at risk.
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Tariff and Regulatory Updates
Supreme Court invalidated some IEEPA tariffs; Section 232 modifications increased costs on HVAC components. EPA final rule allows continued sale of matching 410A systems.
Analysis · WSO · Trade & Services
Watsco's Q2 2026 earnings fell 12% to $4.00 per share, missing expectations as gross margin contracted 180 basis points to 27.5% — the pass-through of steep 2025 OEM price hikes squeezed profitability even as revenue grew 2%. The company also closed the $186 million stock acquisition of Jackson Supply Company, adding 25 Sunbelt locations and $230 million in annual sales. A legal dispute with Gree over exclusive distribution rights adds uncertainty, though the affected revenue is less than 3% of the total. Tariff volatility and the EPA's final rule on 410A systems are ongoing operational headwinds.
At the time of this filing, WSO was trading at $330.10 on NYSE in the Trade & Services sector, with a market capitalization of approximately $13.5B. The 52-week trading range was $300.66 to $459.00. This filing was assessed with negative market sentiment and an importance score of 7 out of 10.