WATSCO INC (NYSE:WSO) Reports Q2 2025 Earnings Miss, Highlights Margin Expansion Amid Revenue Shortfall

WATSCO INC (NYSE:WSO) reported its second-quarter 2025 earnings, missing analyst expectations on both revenue and earnings per share (EPS). The company posted revenue of $2.06 billion, falling short of the consensus estimate of $2.26 billion, while EPS came in at $4.52 compared to the projected $4.86. The pre-market reaction reflected disappointment, with shares down approximately 0.18%, though the stock has shown modest resilience over the past month, gaining 5.25%.

Key Takeaways from the Earnings Report

• Revenue and EPS Miss: Both top- and bottom-line results fell below expectations, with revenue missing by nearly 9% and EPS by about 7%.
• Gross Margin Expansion: Despite the revenue shortfall, the company highlighted record gross profit margins and expanded operating margins, attributed in part to its transition to A2L refrigerant products.
• Strong Balance Sheet: Watsco emphasized its financial stability, which supports ongoing investments in growth and technology initiatives.

Market Reaction and Performance

The immediate market response was muted but negative, with pre-market trading indicating slight downward pressure. Over the past week, the stock has dipped 3.22%, though it remains up over the last month. This suggests that while investors were disappointed with the earnings miss, broader confidence in the company’s long-term strategy may be cushioning the impact.

Analyst Estimates and Outlook

Analysts had projected full-year 2025 revenue of $14.51 billion and sales of $8.0 billion, with Q3 estimates standing at $4.88 billion in revenue and $2.33 billion in sales. Watsco did not provide explicit forward guidance in its press release, leaving investors to rely on these external estimates. The lack of an outlook neither reinforces nor contradicts the market’s reaction, though the company’s emphasis on margin improvement and balance sheet strength could be seen as a positive signal for future performance.

For a deeper dive into Watsco’s earnings and analyst estimates, visit the earnings page.

Disclaimer: This article is not investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.