Watsco reports mixed Q2 results amid margin normalization
I'm LongbridgeAI, I can summarize articles.Watsco reported mixed Q2 2026 results, with revenue rising 2% to $2.1 billion but operating income and EPS falling 12% due to margin normalization. The company acquired Jackson Supply Company, boosting its Sunbelt presence, while e-commerce sales grew 13%. Watsco raised its annual dividend by 10% to $13.20 per share. Analysts maintain a 'Buy' rating with a $420 price target, citing strong financial resilience despite weak technicals.
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Watsco ( (WSO) ) just unveiled an update.
Watsco reported second-quarter and year-to-date 2026 results showing modest revenue growth but lower profitability amid normalized pricing and post-transition dynamics in the HVAC market. For the quarter ended June 30, 2026, revenue rose 2% to $2.1 billion while operating income fell 12% and earnings per share declined 12%, as gross margins contracted following outsized pricing benefits in 2025 linked to inflation, tariffs and the shift to A2L refrigerant-based systems.
Sales trends indicated stabilizing end-market demand, with domestic residential HVAC equipment revenue up 5% and strong growth in commercial refrigeration, even as other HVAC products softened slightly. Watsco deepened its Sunbelt footprint by acquiring Jackson Supply Company in June 2026, adding roughly $230 million in annualized sales across 25 locations and about 5,000 customers, while continuing to pursue additional acquisitions in a market that still counts more than 2,100 distributors.
The company highlighted the accelerating impact of its technology platforms, including 13% growth in e-commerce sales in the first half of 2026 to $2.7 billion over the trailing 12 months, now representing 37% of sales with some regions above 70%. Digital tools such as HVAC Pro+ and OnCallAir® drove greater customer engagement, with OnCallAir® gross merchandise value reaching $1 billion in the first six months of 2026, a 14% year-on-year increase, underscoring Watsco’s push to embed data and AI capabilities across its network.
Operationally, year-to-date 2026 revenue increased 1% to $3.6 billion, but operating income declined 9% and EPS fell 9% as SG&A rose and margins normalized, although cash used in operations improved sharply to $21 million from $185 million a year earlier due to more conventional working-capital trends. The company, which raised its annual dividend by 10% to $13.20 per share in April 2026, emphasized that its scale, OEM relationships, technology investments and strong, debt-free balance sheet position it for ongoing growth and improved efficiency in a more stable regulatory and supply-chain environment.
The most recent analyst rating on (WSO) stock is a Buy
with a $420.00 price target.
To see the full list of analyst forecasts on Watsco stock,
see the WSO Stock Forecast page.
Spark’s Take on WSO Stock
According to Spark, TipRanks’ AI Analyst, WSO is a Outperform.
The score is driven primarily by strong financial resilience (low leverage and strong free cash flow) and a generally constructive earnings outlook emphasizing stabilization and accelerating digital channels. These positives are tempered by weak technicals (downtrend with bearish momentum) and a valuation that looks demanding despite a solid dividend yield.
To see Spark’s full report on WSO stock,
click here.
More about Watsco
Watsco, Inc. is the largest distributor in the highly fragmented North American HVAC market, supplying equipment, parts and supplies through more than 650 locations. Since entering distribution in 1989, it has pursued an organic and acquisition-led growth strategy, assembling over 70 market-leading businesses and investing heavily in digital tools that serve more than 70,000 contractors and technicians.
The company maintains a debt-free balance sheet with $464 million in cash and cash investments, supporting continued expansion and technology initiatives such as mobile apps, e-commerce platforms and AI-driven solutions. Its buy-and-build strategy targets HVAC distributors across the Sunbelt and broader North America, reinforcing its scale and competitive position in residential and commercial climate-control markets.
Average Trading Volume: 363,691
Technical Sentiment Signal: Hold
Current Market Cap: $14.87B
Find detailed analytics on WSO stock on TipRanks’ Stock Analysis page.