Watsco, Inc.WSO
NYSE•Industrials•Industrial Distribution
Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, and refrigeration equipment, and related parts and supplies in the United States, Canada, Latin America, and the Caribbean. It distributes equipment, including residential ducted and ductless air conditioners, such as gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. The company also offers parts comprising replacement compressors, evaporator coils, motors, and other component parts; and supplies, such as thermostats, insulation materials, refrigerants, ductworks, grills, registers, sheet metals, tools, copper tubing, concrete pads, tapes, adhesives, and other ancillary supplies, as well as plumbing and bathroom remodeling supplies. It serves contractors and dealers that service the replacement and new construction markets for residential and light commercial central air conditioning, heating, and refrigeration systems. Watsco, Inc. was incorporated in 1956 and is headquartered in Miami, Florida.
Watsco, Inc. (WSO) reported trailing twelve months revenue of $7.19B as of March 2026, a 10.0% decline year-over-year. Quarterly revenue reached $1.53B, reflecting a contraction in sales.
Watsco, Inc. generated $504.32M in TTM net income, with quarterly EBITDA of $121.20M. The operating margin contracted from 11.6% to 7.2%, suggesting rising cost pressures or pricing headwinds.
The spread between operating margin (7.2%) and net margin (5.2%) indicates tight cost control with minimal non-operating drag. Net margin has narrowed from 7.9% a year ago, reflecting increased costs or interest expense.
WSO trades at a P/E of 26.2x (in line with broad market averages) and a P/S of 1.8x. The price-to-book ratio of 4.8x reflects a moderate premium to book value.
The company reported negative free cash flow of $-25.87M, indicating cash consumption over the period. The balance sheet shows $4.65B in total assets with $368.51M in long-term debt against $2.76B in stockholders equity for a debt-to-equity ratio of 0.1, a conservative capital structure. Data based on the most recent quarterly reports.
Competitive analysis based on 21 quarters of fundamental data
Operating margins are positive at ~10.4% on average, but show some variability — pricing power may be sensitive to market conditions.
Consistently high ROE averaging 22.0% suggests a durable competitive advantage and efficient capital allocation.
5 of the last 8 quarters generated positive FCF. The company generally funds itself but has occasional cash consumption quarters.
Revenue has been flat or declining over recent quarters, which may indicate eroding demand or competitive pressure.
Data-driven red flags and warnings across 21 quarters
Operating margins declined 11.8% — watch for continued compression, which may signal competitive or cost pressure.
FCF/Net Income has dropped below 0.7x in 4 quarters — monitor for earnings quality deterioration.
D/E ratio is 0.1 — conservative capital structure with low financial risk.
Revenue has softened, declining in 4 quarters. Monitor for further erosion.
FCF turned negative in 3 of the last 8 quarters — occasional cash consumption.
Shares outstanding rose 4.1% — mild dilution. Compare to earnings growth to assess net per-share impact.