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Here's Why You Should Add Watsco (WSO) Stock to Your Portfolio
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Watsco, Inc. (WSO - Free Report) is benefiting from consistent investments in technological advancements and strategic buyouts. Also, the solid performance of heating, ventilation and air conditioning (“HVAC”) equipment, and commercial refrigeration products segments added to the company’s uptrend.
Estimates for Watsco’s 2023 earnings have moved north to $14.51 per share from $14.50 per share over the past 60 days. This depicts analysts' optimism about the company’s growth prospects. Its earnings topped consensus estimates in 10 of the trailing 13 quarters and missed thrice. Sales beat estimates in eight of the trailing 13 quarters.
The Zacks Consensus Estimate for WSO’s 2023 sales and earnings per share (EPS) indicates a rise of 3.1% and 2.2%, respectively, from the year-ago period’s levels.
Watsco is consistently investing in industry-leading technologies to remodel customer experience. The company is deploying various technologies that improve order fill rates with speed and accuracy as well as transform the homeowner experience, which, in turn, will help the company expand its customer base. Through its market-leading 673 locations in 42 U.S. states, Canada, Mexico and Puerto Rico, Watsco’s network supports more than 350,000 contractors, technicians and installers with critical technical assistance, training and other resources to enhance their daily activities.
Watsco’s suite of HVAC Pro+ Mobile apps has witnessed an increase in contractor adoption and e-commerce usage. In first-quarter 2023, authenticated user community grew 19% to more than 53,000 users and e-commerce sales were 33% of total sales. The company is the leading distributor of newly designed, highly efficient and ductless HVAC products. Sales of HVAC ductless systems grew 9% during first-quarter 2023. The acceptance of ductless technology among contractors and consumers paves the pathway for the company’s long-term sales growth prospects.
Acquisitions have been Watsco’s preferred mode of solidifying its product portfolio and leveraging new business opportunities in a bid to increase customer base and profitability. The company focuses on partnering with great businesses focused on the HVAC/R industry. On Mar 3, 2023, one of WSO’s wholly-owned subsidiaries acquired Capitol District Supply Co., Inc., a distributor of air conditioning and heating products.
In the first quarter of 2023, sales of HVAC equipment (68% of sales) were up 2% and commercial refrigeration products (4% of sales) rose 12% year over year.
EXP delivered a trailing four-quarter earnings surprise of 6.5%, on average. Shares of the company have rallied 39.7% in the year-to-date period. The Zacks Consensus Estimate for EXP’s fiscal 2024 sales and earnings per share (EPS) indicates growth of 2% and 8.4%, respectively, from the previous year’s reported levels.
Vulcan Materials currently sports a Zacks Rank of 1. VMC has a trailing four-quarter earnings surprise of 7.1%, on average. Shares of the company have gained 27.6% in the year-to-date period.
The Zacks Consensus Estimate for VMC’s 2023 sales and EPS indicates growth of 5.9% and 26.2%, respectively, from the previous year’s reported levels.
Dycom currently sports a Zacks Rank of 1. DY delivered a trailing four-quarter earnings surprise of 153.7%, on average. Shares of the company have risen 20.6% in the year-to-date period.
The Zacks Consensus Estimate for DY’s fiscal 2024 sales and EPS indicates growth of 8.3% and 41%, respectively, from the previous year’s reported levels.
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Here's Why You Should Add Watsco (WSO) Stock to Your Portfolio
Watsco, Inc. (WSO - Free Report) is benefiting from consistent investments in technological advancements and strategic buyouts. Also, the solid performance of heating, ventilation and air conditioning (“HVAC”) equipment, and commercial refrigeration products segments added to the company’s uptrend.
Estimates for Watsco’s 2023 earnings have moved north to $14.51 per share from $14.50 per share over the past 60 days. This depicts analysts' optimism about the company’s growth prospects. Its earnings topped consensus estimates in 10 of the trailing 13 quarters and missed thrice. Sales beat estimates in eight of the trailing 13 quarters.
The Zacks Consensus Estimate for WSO’s 2023 sales and earnings per share (EPS) indicates a rise of 3.1% and 2.2%, respectively, from the year-ago period’s levels.
Image Source: Zacks Investment Research
Shares of WSO have gained 51.5% in the year-to-date period, outperforming the Zacks Building Products - Air Conditioner and Heating industry’s growth of 44%.
Let us discuss the driving factors broadly.
Factors Driving Watsco’s Growth
Watsco is consistently investing in industry-leading technologies to remodel customer experience. The company is deploying various technologies that improve order fill rates with speed and accuracy as well as transform the homeowner experience, which, in turn, will help the company expand its customer base. Through its market-leading 673 locations in 42 U.S. states, Canada, Mexico and Puerto Rico, Watsco’s network supports more than 350,000 contractors, technicians and installers with critical technical assistance, training and other resources to enhance their daily activities.
Watsco’s suite of HVAC Pro+ Mobile apps has witnessed an increase in contractor adoption and e-commerce usage. In first-quarter 2023, authenticated user community grew 19% to more than 53,000 users and e-commerce sales were 33% of total sales. The company is the leading distributor of newly designed, highly efficient and ductless HVAC products. Sales of HVAC ductless systems grew 9% during first-quarter 2023. The acceptance of ductless technology among contractors and consumers paves the pathway for the company’s long-term sales growth prospects.
Acquisitions have been Watsco’s preferred mode of solidifying its product portfolio and leveraging new business opportunities in a bid to increase customer base and profitability. The company focuses on partnering with great businesses focused on the HVAC/R industry. On Mar 3, 2023, one of WSO’s wholly-owned subsidiaries acquired Capitol District Supply Co., Inc., a distributor of air conditioning and heating products.
In the first quarter of 2023, sales of HVAC equipment (68% of sales) were up 2% and commercial refrigeration products (4% of sales) rose 12% year over year.
Zacks Rank & Other Key Picks
Watsco currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the Construction sector are Eagle Materials Inc. (EXP - Free Report) , Vulcan Materials Company (VMC - Free Report) and Dycom Industries, Inc. (DY - Free Report) .
Eagle Materials currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EXP delivered a trailing four-quarter earnings surprise of 6.5%, on average. Shares of the company have rallied 39.7% in the year-to-date period. The Zacks Consensus Estimate for EXP’s fiscal 2024 sales and earnings per share (EPS) indicates growth of 2% and 8.4%, respectively, from the previous year’s reported levels.
Vulcan Materials currently sports a Zacks Rank of 1. VMC has a trailing four-quarter earnings surprise of 7.1%, on average. Shares of the company have gained 27.6% in the year-to-date period.
The Zacks Consensus Estimate for VMC’s 2023 sales and EPS indicates growth of 5.9% and 26.2%, respectively, from the previous year’s reported levels.
Dycom currently sports a Zacks Rank of 1. DY delivered a trailing four-quarter earnings surprise of 153.7%, on average. Shares of the company have risen 20.6% in the year-to-date period.
The Zacks Consensus Estimate for DY’s fiscal 2024 sales and EPS indicates growth of 8.3% and 41%, respectively, from the previous year’s reported levels.