Core Viewpoint - Watsco (NYSE: WSO) is viewed as a steady compounder despite a significant share price decline in 2025, making it a justified buy for long-term holders [1]. Group 1: Company Performance - Long-term revenue growth for Watsco is expected to be well above GDP growth [1]. Group 2: Investment Perspective - The analysis emphasizes the importance of deep knowledge in identifying great businesses for investment [1].

Despite a significant share price decline in 2025, Watsco (NYSE: WSO ) (NYSE: WSO.B ) still looks like a steady compounder to me, justifying a buy for long-term holders. Long-term revenue growth well above GDP isI hold a Master's in Accounting, am a small business owner, and am an assistant investing educator for beginning and intermediate individual investors. My investing analysis focus is on identifying and developing deep knowledge of great businesses. I have helped manage businesses, spend most of my e ...

Core Insights - Watsco, Inc. will hold an investor meeting on December 11, 2025, to discuss its technology and growth strategy [1] - The company has transformed the HVAC/R distribution landscape through advanced technologies, enhancing customer experience and gaining market share [2] - Watsco is focused on sustaining its competitive advantage in the $74 billion HVAC/R distribution market through new platform launches and investments [3] Company Overview - Watsco is the largest distributor in the fragmented $74 billion North American HVAC products market, achieving an 18% compounded annual total-shareholder return since 1989 through organic growth and acquisitions [4] - The company has a solid financial position and a culture of innovation, enabling long-term growth investments, including industry-leading technology platforms [5] Technology and Innovation - More than 70,000 contractors, installers, and technicians engage with Watsco's platforms, leading to improved growth and lower attrition [5] - The company is advancing AI-driven initiatives to leverage extensive data assets, enhancing customer experience and operational efficiencies [5]

MIAMI, Oct. 13, 2025 (GLOBE NEWSWIRE) -- Watsco, Inc. (NYSE: WSO) announced today that it will host its third quarter 2025 conference call on Wednesday, October 29, 2025 at 10:00 a.m. (EDT). Prepared remarks regarding the results will be followed by a question-and-answer session with the senior management team.The conference call will be web-cast by CCBN's StreetEvents and can be found under the link on our website at www.watsco.com. The earnings results will be released before the market opens on October 2 ...

Core Insights - Investing in dividend growth stocks is highlighted as one of the easiest and most effective strategies on Wall Street [1] Company Analysis: Watsco - Watsco, the largest HVACR parts distributor in America, has increased its dividend payout by 69% over the past five years, currently offering a yield of 2.8% [4][5] - The company has grown by acquiring over 70 businesses and has no debt on its balance sheet as of June [5] - Watsco is leveraging online applications for contractors, with 70,000 mobile app users facilitating the quote process and ordering parts [6] - Despite a 3% revenue decline in the first half of 2025 due to temperate weather and lower homebuilding activity, Watsco's sales are primarily from repairs and replacements, which may mitigate investor concerns during economic slowdowns [7][8] Company Analysis: Amgen - Amgen, a long-established biotechnology company, has raised its dividend payout by 48% over the past five years, currently offering a yield of 3.4% [10] - The company reported a 34% year-over-year decline in sales of its arthritis treatment Enbrel, amounting to an annualized $2.4 billion, but has invested profits into new drug developments [10] - Amgen's overall sales grew by 9% year over year to $8.8 billion, with double-digit growth in 15 products [11] - The new treatment Imdelltra for small-cell lung cancer has shown promising results, potentially becoming standard care, which could drive future sales growth [12][13]

Group 1 - The residential HVAC market is experiencing significant changes, with various updates from OEMs and industry data indicating cross currents in the market [1] - There is a historical context regarding the transition from refrigerant 410A, which is being phased out, leading to inventory adjustments by distributors to meet customer demand [2]

Summary of Watsco Inc. Conference Call Industry Overview - The HVAC industry is experiencing significant changes, particularly with the transition from 410A refrigerant to newer alternatives like 454, impacting sales and inventory levels [6][41] - Industry shipments were up 22% in July of the previous year, but the current year shows a decline in demand, with units down approximately 10-12% year-to-date [6][12] - The demand structure has shifted, with new housing construction and multifamily projects seeing a decline, particularly in Florida, which constitutes 20% of Watsco's business [18][19] Company Performance - Watsco Inc. reported a 24% increase in inventory while sales were down 4% in the second quarter [25] - The company is focused on managing inventory levels to align with current market demand, aiming to reduce inventory by the end of the year [29] - The average price of products sold has increased by about 12%, contributing to stable margins despite declining unit sales [18][29] Key Challenges - The company faces challenges related to consumer spending, with indications that consumers are less willing to invest in home improvements, leading to a preference for repairs over replacements [21][22] - There is a concern about the cyclical nature of the business, with the current environment suggesting a potential trough in consumer activity [23] Strategic Initiatives - Watsco is working closely with OEM partners to develop strategies for growth, leveraging their market share and capital to support OEMs in expanding their business [28][71] - The company is focused on maintaining price stability and protecting margins while navigating the complexities of inventory management and product transitions [17][20] Future Outlook - The company anticipates a more favorable environment for growth in the upcoming year, contingent on improved economic conditions and consumer confidence [22][71] - Watsco's long history of dividend payments, averaging a 10-11% compounded rate over the last 15 years, is tied more to cash flow than EPS, allowing for flexibility in dividend increases even in a down market [63][69] Additional Insights - The transition from 410A to newer refrigerants has created an artificial writedown risk for distributors holding excess inventory, but Watsco has managed this risk conservatively [41][42] - The light commercial segment remains stable, with potential for growth depending on economic conditions and interest rates [48][50] - Watsco's extensive branch network allows for efficient inventory management, reducing the need for dealers to hold excess stock [52] This summary encapsulates the key points discussed during the conference call, highlighting the current state of the HVAC industry, Watsco's performance, challenges, strategic initiatives, and future outlook.

Company Overview - Watsco operates the largest distribution network for heating, air conditioning, and refrigeration (HVAC/R) products across the U.S., Canada, Mexico, and Puerto Rico, with exports to Latin America and the Caribbean [2] - The company has 701 locations that serve over 375,000 contractors, technicians, and installers annually [2] Market Focus - Watsco focuses on the replacement market, which is growing due to aging systems, the introduction of energy-efficient models, and the essential nature of HVAC products in homes and businesses [3] - Approximately 102 million HVAC systems in the U.S. are over 10 years old and operate below current efficiency standards, presenting a significant opportunity for Watsco [3] Environmental Impact - Watsco has contributed to reducing CO2e emissions by an estimated 24.5 million metric tons from January 1, 2020, to June 30, 2025, through the sale of higher-efficiency replacement HVAC systems [4] - This reduction is equivalent to removing 5.7 million gas-powered vehicles from the road annually [4] Upcoming Events - Barry S. Logan, Executive Vice President of Watsco, is scheduled to present at the 13th Annual Morgan Stanley Laguna Conference on September 11, 2025 [1]

Group 1: PepsiCo - PepsiCo is considered undervalued with a forward price-to-earnings (P/E) ratio of 18.5, significantly lower than its historical median P/E of 26.2 [5] - Activist investor Elliott Investment Management has acquired a $4 billion stake in PepsiCo, representing approximately 2% ownership, indicating confidence in the company's potential [4] - Despite the potential, PepsiCo's stock has underperformed, gaining little over the past five years compared to the consumer staples sector and Coca-Cola [6][9] - The company has a strong dividend yield of 3.8% and has increased its payout for 53 consecutive years, making it attractive for dividend investors [11] Group 2: ConocoPhillips - ConocoPhillips has seen a stock decline of about 13% over the past year, attributed to a 10.7% drop in oil prices, presenting a buying opportunity for investors seeking passive income [12][13] - Management projects strong free cash flow of approximately $8 billion for 2025, supported by tax benefits and lower capital requirements [14] - The company has maintained a conservative payout ratio of 42.3% over the past five years, ensuring financial stability while rewarding shareholders [15] - ConocoPhillips offers a forward dividend yield of 3.2%, making it an appealing option for income-focused investors [12] Group 3: Watsco - Watsco's stock has declined by 16.6% year-to-date, primarily due to weak conditions in the HVACR market and challenges in the new residential construction sector [17][19] - The company has a successful business model focused on acquiring smaller distributors, which enhances its geographic reach and operational scale [18] - Current challenges are expected to be temporary, and Watsco is well-positioned to strengthen its market position as conditions improve [20]

Core Insights - Watsco's international revenue performance is crucial for assessing its financial resilience and growth prospects [1][2][3] Group 1: International Revenue Performance - In the last quarter, Watsco's total revenue was $2.06 billion, a decline of 3.6% year-over-year [4] - Canada contributed $93.71 million, representing 4.5% of total revenue, which was a surprise of -3.83% compared to the consensus estimate [5] - Latin America and the Caribbean generated $94.35 million, accounting for 4.6% of total revenue, with a surprise of -16.51% against projections [6] Group 2: Future Revenue Projections - Analysts expect Watsco to report $2.21 billion in total revenue for the current fiscal quarter, an increase of 2.3% year-over-year [7] - For the full year, total revenue is projected at $7.64 billion, reflecting a 0.3% increase from the previous year [8] - Expected contributions from Canada and Latin America and the Caribbean for the full year are $370.31 million (4.9%) and $404.53 million (5.3%), respectively [8] Group 3: Market Dynamics and Stock Performance - Watsco's reliance on foreign markets presents both opportunities and challenges, necessitating close monitoring of international revenue trends [9] - The company's stock has underperformed, losing 12.6% over the past month compared to a 2.7% increase in the S&P 500 [14] - Over the past three months, Watsco's shares declined 16.5%, while the S&P 500 rose by 13.2% [14]