HVAC maker Watsco's Q3 revenue misses estimates, aims to reduce inventory by Q4

Watsco

29/10/2025 11:42

Overview

Watsco Q3 revenue declined 4% to $2.07 bln, missing analyst expectations

Gross profit margin expanded 130 basis-points to a record 27.5%

Company invested in AI and tech to enhance customer experience and efficiency

Outlook

Company expects fourth quarter results to be impacted by same factors as third quarter

Watsco anticipates improved operating efficiency in 2026 due to non-recurring costs

Company targets further inventory reductions in fourth quarter

Result Drivers

A2L TRANSITION - Regulatory shift to A2L refrigerants impacted 55% of products, causing sales volatility and inventory conversion costs

PRICING STRATEGY - Double-digit pricing for A2L products and OEM price actions helped offset unit declines

TECHNOLOGY INVESTMENTS - Investments in AI and digital platforms aim to enhance customer experience and operational efficiency

Key Details

Metric
Beat/Miss
Actual
Consensus Estimate
Q3 Sales
Miss
$2.06 bln
$2.21 bln (12 Analysts)
Q3 EPS
$3.98


Analyst Coverage

The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 13 "hold" and 1 "sell" or "strong sell"

The average consensus recommendation for the electrical components & equipment peer group is "buy."

Wall Street's median 12-month price target for Watsco Inc is $437.50, about 18.1% above its October 28 closing price of $358.39

The stock recently traded at 26 times the next 12-month earnings vs. a P/E of 29 three months ago

Press Release: ID:nGNX6VWkmG

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact RefinitivNewsSupport@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)