Watsco

Q2 FY2026 EarningsQ2 FY26 results presented a mixed picture with a top-line beat but significant margin and EPS misses. Revenue reached $2.10B, slightly exceeding the $2.15B consensus (on a rounded basis, actual was +1.8% vs. consensus mean), driven by a 5% increase in residential HVAC equipment and a 19% surge in commercial refrigeration. However, EPS of $4.00 missed the $4.39 consensus mean by 8.9%, pressured by a gross margin contraction to 27.5% (vs. 28.3% expected). Management attributed the margin compression to normalized pricing versus outsized 2025 gains, despite closing the Jackson Supply acquisition to boost Sunbelt density.