Watsco Q3 Sales Reach Record $2.22B, but EPS Slips 5% to $3.77 as Margins Compress
WSO is trading near its 52-week low of $277.34 (11% above the low) on elevated volume (1.9× avg).
Summary
Record Q3 revenue of $2.22 billion, up 7%, came alongside margin compression that cut EPS 5% to $3.77. Same-store sales grew 4% with residential units turning positive, and nine-month operating cash flow rose 79% to $304 million.
Key Events · Earnings and Guidance · WSO
-
Record Q3 Revenue, EPS Down 5%
Revenue rose 7% to a record $2.22 billion, while diluted EPS fell 5% to $3.77 from $3.98 a year earlier.
-
Gross Margin Slips to 26.4%
Gross margin fell to 26.4% from 27.5% on customer and end-market mix and smaller 2026 OEM pricing actions; operating income dropped 4% to $225 million, a 10.1% margin versus 11.4%.
-
Same-Store Sales Up 4%
Same-store sales grew 4%, with residential HVAC equipment units up 5% and average selling price up 2%; management said trends improved through the season and momentum continued into early Q4.
-
Cash Flow Jumps 79%
Nine-month operating cash flow rose 79% to $304 million, supporting the 10% dividend increase to $13.20 per share and acquisition funding.
Analysis · WSO · Trade & Services
Revenue climbed 7% to a record $2.22 billion, yet gross margin fell to 26.4% from 27.5% and operating income dropped 4% to $225 million, dragging EPS down 5% to $3.77. The margin squeeze reflects customer and end-market mix plus smaller 2026 OEM price increases, not lost volume: same-store sales rose 4% and residential equipment units grew 5%, and management says early fourth-quarter trends show further improvement. Cash generation is the offset, with nine-month operating cash flow up 79% to $304 million, funding a 10% dividend increase to $13.20 annually and the recently closed Granite Group deal that adds roughly $500 million of annual sales. The debate is whether margins normalize as pricing actions annualize or whether the mix shift toward larger customers keeps profitability under pressure.
How filings like this one have moved
In the 30 days to Oct 27, 2026, 29.9% of the 1374 measured filings Wiseek scored 7 moved their stock by 5% or more by the next session's close. The median move was -0.12%. These are measured outcomes after filings of this importance, not a forecast for this one.
Measured one observation per ticker per day, after exclusions. Current figures: Filing Impact Tracker · open dataset
At the time of this filing, WSO was trading at $307.01 on NYSE in the Trade & Services sector, with a market capitalization of approximately $12.7B. The 52-week trading range was $277.34 to $459.00. This filing was assessed with neutral market sentiment and an importance score of 7 out of 10.