$WSO — HOLD 📊 | 6 MONTHS THESIS

Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, and refrigeration equipment, and related parts and supplies in the United St 🎯 FQ2 FY2026 (ends Jun) | reported Jul 29 | Rev $2.1B | Adj EPS $4.00 vs $4.39 🔴 | GAAP EPS $4.59 | GAAP op margin 11.3% 💡 Market expected about $4.39 EPS; actual $4.00 was a ~9% miss. More important than the beat/miss is the signal that gross margin compressed 180bps and demand stayed soft into mid-2026. The stock already fell sharply from the $385 area, suggesting negative revisions are partly priced. 🏢 Business Quality: 8/10 📊 Valuation: At $310.8 with ~35.59M shares, market cap is ~$12.87B. Trailing P/E is ~27x on declining 2026 H1 earnings; on roughly $12.20 normalized FY2025 EPS... 🔮 Catalyst: Q3 FY2026 earnings (est. Oct 28,2026) / gross margin stabilization at or above 28% and flat-to-positive same-store sales, with Jackson Supply integration contribution / failure would be gross margin below 27

Watsco, Inc., together with its subsidiaries, engages in the distribution of air conditioning, heating, and refrigeration equipment, and related parts and supplies in the United St