Watsco(WSO) ZACKS·2025-02-13 16:26Core Viewpoint - Watsco, Inc. is expected to report its fourth-quarter 2024 results on February 18, with a consensus estimate indicating a potential earnings beat due to strong HVAC demand and improved margins [1][9]. Financial Performance - In the last reported quarter, Watsco's earnings missed the Zacks Consensus Estimate by 12.8% and decreased by 3% year over year, while sales also missed the consensus mark by 3.9% but increased by 2% year over year [2]. - The Zacks Consensus Estimate for the upcoming quarter's earnings has risen to 2.05 per share, reflecting a 3.4% increase from the previous year's earnings of 1.65 billion, indicating a 3% year-over-year growth [3]. Revenue Drivers - The anticipated growth in Watsco's fourth-quarter revenues is attributed to strong performance in the HVAC equipment segment, particularly in the commercial market [4]. - Ongoing investments in advanced technologies, strategic acquisitions, and robust e-commerce sales are expected to contribute positively to the company's performance [5]. Segment Performance - HVAC Equipment sales, which accounted for 71% of total sales in the third quarter of 2024, are projected to grow by 2.3% year over year to 483.3 million, while Commercial Refrigeration Products sales are anticipated to rise by 1.3% to $64.9 million [6]. Margin Analysis - The gross margin is expected to improve by 80 basis points year over year to 26.6%, driven by a better price/mix. Additionally, SG&A expenses as a percentage of net sales are projected to decrease to 19.2% from 19.5% a year ago [8]. Earnings Prediction - The model predicts an earnings beat for Watsco, supported by a positive Earnings ESP of +0.94% and a Zacks Rank of 2 (Buy) [9].