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Factors Setting the Tone for Watsco (WSO) Earnings in Q4

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Watsco, Inc. (WSO - Free Report) is scheduled to report fourth-quarter 2019 results on Feb 13. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 2.2%.

Q4 Expectations

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.01, suggesting a decline of 1% from the year-ago quarter. Over the past 30 days, the company’s earnings estimates have been stable. For quarterly revenues, the consensus mark is pegged at $1,082 million, indicating an improvement of 9.1% from the prior-year reported figure.

Factors Likely to Impact Q4 Results

Technology deployment, strategic buyouts and robust performance of Sunbelts markets are likely to have benefited Watsco’s fourth-quarter performance. 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 800,000 SKUs. Moreover, technology deployment is likely to have driven the company’s e-commerce sales in the quarter to be reported.

Moreover, Watsco, which shares space with Lennox International Inc. (LII - Free Report) , has significant prospect in the replacement and heating equipment market. Increase in demand for HVAC equipment (heating, ventilating and air conditioning) is likely to have aided the company’s the fourth-quarter performance.

However, higher material cost and intense competition are likely to have weighed on the company’s fourth-quarter performance. 

 

Watsco, Inc. Price and EPS Surprise

 

 

What Does the Zacks Model Say?

Our proven model does not conclusively predict 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. But that's not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Watsco has a Zacks Rank #2 and an Earnings ESP of -5.63%.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Construction space that investors may consider, as our model shows that these have the right combination of elements to deliver an earnings beat this season.

Installed Building Products, Inc. (IBP - Free Report) has an Earnings ESP of +3.09% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aspen Aerogels, Inc. (ASPN - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #3.

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