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Innovative Technology to Aid Watsco's (WSO) Q1 Earnings

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Watsco, Inc. (WSO - Free Report) is set to report first-quarter 2021 results on Apr 22, before the closing bell.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 12.9% and 1.8%, respectively. On a year-over-year basis, earnings and revenues increased 23.9% and 7.7%, respectively.

Watsco's earnings topped the consensus mark in three of the last four quarters, with the average surprise being 5.5%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 2.2% to 91 cents from 89 cents per share over the past month. The estimated figure indicates 26.4% growth from the year-ago earnings of 72 cents per share. The consensus mark for revenues is $1.08 billion, suggesting 6.7% year-over-year growth.

Watsco, Inc. Price and EPS Surprise

Watsco, Inc. Price and EPS Surprise

Watsco, Inc. price-eps-surprise | Watsco, Inc. Quote

Factors to Note

Watsco’s heating, ventilation and air conditioning business is likely to have benefited from the industry-leading technology in the first quarter. The company has been deploying technology that improves order fill rates with speed and accuracy. It has the industry’s largest database of digitized product information, with more than 875,000 SKUs. Notably, its OnCall Air service, CreditForComfort application, and contactless sales and servicing capabilities have been commendable. Moreover, technology deployment is likely to have driven the company’s e-commerce sales in the quarter to be reported.

Apart from innovative technology, acquisitions have been Watsco’s preferred mode of solidifying the product portfolio and leveraging new business opportunities.

Meanwhile, solid housing market fundamentals and repair & remodeling activity are expected to have aided the company’s top line in quarter to be reported. The company has been optimistic about its innovative technology and diversified product portfolio.

However, price pressure on raw materials and tariff-related woes may have been a concern for the company’s bottom line.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Watsco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, it has a Zacks Rank #3 and an Earnings ESP of +0.71%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Worth a Look

Here are some other companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +11.75% and sports a Zacks Rank #1.

PotlatchDeltic Corporation (PCH - Free Report) has an Earnings ESP of +1.56% and sports a Zacks Rank #1.

Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +10.77% and a Zacks Rank #2.

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