Equipment distributor Watsco (NYSE: WSO) will be reporting earnings this Tuesday before market open. Here’s what investors should know.
Watsco missed analysts’ revenue expectations last quarter, reporting revenues of $1.58 billion, down 10% year on year. It was a disappointing quarter for the company, with a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
Is Watsco a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.
This quarter, the market is expecting Watsco’s revenue to decline 3.2% year on year, a further deceleration from the 2.2% decrease it recorded in the same quarter last year.
The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings.
Looking at Watsco’s peers in the industrial distributors segment, some have already reported their Q1 results, giving us a hint as to what we can expect. Richardson Electronics delivered year-on-year revenue growth of 3.1%, beating analysts’ expectations by 4.4%, and United Rentals reported revenues up 7.2%, topping estimates by 2.4%. Richardson Electronics traded up 22.7% following the results while United Rentals was also up 22.9%.
Read our full analysis of Richardson Electronics’s results here and United Rentals’s results here.
There has been positive sentiment among investors in the industrial distributors segment, with share prices up 15% on average over the last month. Watsco is up 26.3% during the same time and is heading into earnings with an average analyst price target of $415.42 (compared to the current share price of $440.73).
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