A Look at Watsco's (WSO) Valuation Following Weaker Earnings and Industry Headwinds

Simply Wall St.12-01

Watsco (WSO) just released its third-quarter 2025 earnings, missing estimates as both earnings per share and revenue declined compared to last year. The results reflected ongoing industry shifts and ...

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The results reflected ongoing industry shifts and ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/capital-goods/nyse-wso/watsco/news/a-look-at-watscos-wso-valuation-following-weaker-earnings-an\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>A Look at Watsco's (WSO) Valuation Following Weaker Earnings and Industry Headwinds</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nA Look at Watsco's (WSO) Valuation Following Weaker Earnings and Industry Headwinds\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-12-01 11:21 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/us/capital-goods/nyse-wso/watsco/news/a-look-at-watscos-wso-valuation-following-weaker-earnings-an><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Watsco (WSO) just released its third-quarter 2025 earnings, missing estimates as both earnings per share and revenue declined compared to last year. The results reflected ongoing industry shifts and ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/capital-goods/nyse-wso/watsco/news/a-look-at-watscos-wso-valuation-following-weaker-earnings-an\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"WSO","symbol_name":"华斯科","start_time":0,"source_url":"https://simplywall.st/stocks/us/capital-goods/nyse-wso/watsco/news/a-look-at-watscos-wso-valuation-following-weaker-earnings-an","article_id":"2588741709","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/3081000-choice2-main-header/1585186749644"],"rights":{"source":"simplywall_highlight","url":"https://simplywall.st/stocks/us/capital-goods/nyse-wso/watsco/news/a-look-at-watscos-wso-valuation-following-weaker-earnings-an","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2588741709","pubTimestamp":1764559291,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Watsco (WSO) just released its third-quarter 2025 earnings, missing estimates as both earnings per share and revenue declined compared to last year. The results reflected ongoing industry shifts and softer housing demand.\nSee our latest analysis for Watsco.\nWatsco’s share price has been under pressure this year, sliding 26% year-to-date, with the latest results and uncertain demand weighing on investor confidence. Even so, the three- and five-year total shareholder returns of 41% and 82%...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"WSO":"华斯科","IE0008368304.USD":"STEWART INVESTORS WORLDWIDE LEADERS SUSTAINABILITY FUND \"I\" (USD) ACC","BK4548":"巴美列捷福持仓","BK4104":"贸易公司与经销商"},"translate_title":"在盈利疲软和行业逆风之后审视Watsco(WSO)的估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"WSO":1},"content_text":"Watsco (WSO) just released its third-quarter 2025 earnings, missing estimates as both earnings per share and revenue declined compared to last year. The results reflected ongoing industry shifts and softer housing demand. See our latest analysis for Watsco. Watsco’s share price has been under pressure this year, sliding 26% year-to-date, with the latest results and uncertain demand weighing on investor confidence. Even so, the three- and five-year total shareholder returns of 41% and 82% suggest that its long-term momentum has not fully faded. If you’re scanning the market for fresh ideas, now is the perfect time to spot fast growing stocks with high insider ownership. With earnings under pressure, yet record gross margin and a meaningful discount to analyst price targets, investors face a familiar dilemma: is Watsco undervalued in the current market environment, or is the stock simply reflecting realistic growth expectations? AdvertisementMost Popular Narrative: 15.3% Undervalued With Watsco’s fair value calculated at $408.90, which is over $60 above the current share price, the most popular narrative points to a meaningful disconnect between the latest close and long-term fundamentals.  The company's core HVAC replacement business saw a 10% sales increase from higher volumes and a richer mix of high-efficiency systems. This may continue to drive revenue growth and potentially improve gross margins as more of this product mix transitions to broader market adoption.  Read the complete narrative. Think these new systems are Watsco’s ticket to outperformance? The narrative’s fair value depends on optimistic assumptions such as future market adoption, shifting sales mixes, and sharper profit margins. Want a peek into the numbers behind that valuation leap? You may want to look closer and see the surprising projections powering this price target. Result: Fair Value of $408.90 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, potential delays in the A2L transition or pressure from tariffs could disrupt Watsco’s recovery and call the company’s bullish valuation into question. Find out about the key risks to this Watsco narrative. Another View: Market Multiples Tell a Different Story While the narrative and fair value suggest Watsco is undervalued, the price-to-earnings ratio paints a less convincing picture. At 27x, Watsco trades well above the US Trade Distributors industry average of 19.5x, its peers at 18x, and even the fair ratio of 23.6x suggested by regression analysis. This gap raises questions about valuation risk. Does the market see something others do not, or is there more downside ahead? See what the numbers say about this price — find out in our valuation breakdown. NYSE:WSO PE Ratio as at Dec 2025 Build Your Own Watsco Narrative If you see things differently or want to put your own analysis to the test, you can build a narrative with your perspective in just a few minutes. Do it your way. A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Watsco. Looking for More Investment Ideas? Don’t let your next opportunity slip by. The Simply Wall Street Screener puts compelling stocks right at your fingertips for every investing style.  Grow your income potential by checking out these 15 dividend stocks with yields > 3% with attractive yields and robust fundamentals supporting strong payouts. Spot the future’s most compelling technologies and get ahead of the curve with these 25 AI penny stocks advancing breakthroughs in artificial intelligence and automation. Take advantage of deep value by scanning these 913 undervalued stocks based on cash flows to uncover stocks trading below their fair value based on cash flows and market sentiment.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Watsco might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. 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