WATSCO INC (NYSE:WSO) Misses Q3 2025 Revenue and EPS Estimates

WATSCO INC (NYSE:WSO) reported financial results for the third quarter of 2025, delivering a performance that diverged from analyst expectations on key profit and revenue metrics. The company's press release highlighted significant operational achievements, including record gross profit and margin, though the market's immediate reaction suggests investor focus was elsewhere.

Earnings Versus Estimates

The company's third-quarter results presented a mixed picture when measured against Wall Street's forecasts. While Watsco demonstrated strong internal execution, it fell short of the revenue and earnings per share figures that analysts had projected.

• Revenue: The company reported revenue of $2.07 billion for the quarter, which came in below the analyst estimate of $2.17 billion.
• Earnings Per Share (EPS): Watsco's non-GAAP EPS was $3.98, missing the consensus estimate of $4.24.

This dual miss on both the top and bottom lines appears to be the primary driver behind the negative investor sentiment observed in the stock's recent performance. The company's ability to achieve record gross profit and margin was evidently not enough to offset the disappointment of missing quarterly estimates.

Market Reaction and Price Action

The market's response to the earnings release has been decisively negative, reflecting the discrepancy between the reported figures and expectations. The stock's performance across various timeframes shows a clear downward trend following the earnings announcement.

• Pre-Market Movement: The stock showed a significant pre-market increase of approximately 1.67%, which may have reflected initial optimism from the record profitability headlines. However, this gain was quickly overshadowed by a broader sell-off.
• Recent Weakness: Over the past month, the stock has declined by over 11%, with further losses of more than 5% in the last week alone. This sustained selling pressure indicates that investors are reassessing the company's near-term growth trajectory in light of the quarterly miss.

Press Release Highlights

Beyond the earnings figures, Watsco's announcement emphasized several operational strengths achieved during what it described as "challenging market conditions." The company reported record third-quarter gross profit and gross margin, underscoring its efficiency and pricing power. It also highlighted a record level of operating cash flow, which points to a healthy and liquid balance sheet. Management noted that this financial strength enables continued investment in growth initiatives and its market-leading technologies, positioning the company for long-term opportunities despite the current quarter's setbacks.

Looking Ahead

The analyst community has already set expectations for the future, providing estimates for the upcoming quarter and the full 2025 fiscal year. For the fourth quarter of 2025, analysts are forecasting revenue of $2.34 billion and sales of $1.75 billion. For the full year, the revenue estimate stands at $13.14 billion with sales estimated at $7.52 billion. The press release did not provide a specific quantitative financial outlook from management to compare against these analyst projections. The absence of such guidance is a neutral factor and does not inherently explain the market's negative reaction, which is more directly tied to the Q3 miss.

For a detailed breakdown of historical earnings, future estimates, and analyst ratings, you can review the data available on the WSO earnings and estimates page.

Disclaimer: This article is for informational purposes only and is not intended as investment advice. All investment decisions carry risk, and individuals should conduct their own research or consult with a qualified financial advisor before making any investment decisions.