WSO earnings analysis
What we found in WSO's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Watsco delivered Q2 revenue of $2.105 billion, up approximately 2% year over year, but diluted EPS of $4.00 missed the $4.35 consensus estimate. Gross margin declined 180 basis points year over year to 27.5%, and operating income was $238 million, indicating continued margin pressure. Jackson expands the company’s platform but had not yet been assessed for internal-control reporting; management provided no quantitative forward guidance and reported no material risk-factor changes from the December 31, 2025 10-K.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew, but missed consensus
- Q2 revenue was $2.105 billion, up approximately 2% year over year and above Q1 2026 revenue of $1.53 billion. Revenue nevertheless missed the $2.154 billion consensus estimate by approximately $49 million.
- Operating profitability remained pressured
- Gross margin was 27.5%, down 180 basis points from 29.3% in Q2 2025 and 40 basis points from 27.9% in Q1 2026. Operating income was $238 million, implying an operating margin of approximately 11.3%.
- EPS declined year over year
- Diluted EPS was $4.00 versus $4.52 in Q2 2025 and $1.87 in Q1 2026. EPS was $0.35 below the $4.35 consensus estimate.
- Jackson expands the platform
- Jackson was acquired on June 1, 2026 and represented approximately 4% of consolidated assets at June 30, 2026 and approximately 1% of consolidated revenue for the quarter.
- Controls remained effective
- Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2026, and reported no material changes to internal control over financial reporting during the quarter.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Quarterly results missed expectations
- Revenue of $2.105 billion was approximately $49 million below the $2.154 billion consensus estimate, while diluted EPS of $4.00 was $0.35 below the $4.35 estimate.
- Margin compression weighs on earnings
- Gross margin fell to 27.5% from 29.3% a year earlier, a 180-basis-point decline, while operating income was $238 million. Continued margin pressure could limit earnings growth even if revenue expands.
- Jackson integration and controls risk
- The company stated that risk factors for the quarter ended June 30, 2026 did not differ materially from those in the Annual Report for the year ended December 31, 2025. However, Jackson had not yet been assessed for internal-control reporting and represented 4% of consolidated assets at June 30, 2026.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $4.0
- Gross margin
- 27.5%
- Operating margin
- 11.3%
What they said about what is next.
The 10-Q does not provide quantitative revenue or EPS guidance; no numeric outlook was disclosed.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 8, 2026
- Watsco, Inc. reported Q1 2026 with revenues of $1.533 billion and EPS of $1.87, surpassing estimates. Despite a slight decrease in gross margin and net income, the company demonstrated a significant improvement in cash…
- 10-K · February 27, 2026
- Watsco reports scale and market leadership with revenues of $7.2 billion in 2025 and a network of 695 locations, supported by continued digital investment (≈300 technology employees) and a deep JV relationship with…
- 10-Q · November 7, 2025
- Watsco, Inc. reported a slight decline in third-quarter revenue with total revenues of $2.07 billion, down 4.3% from $2.16 billion year-over-year. Operating income fell 6.2% to $234.76 million, with a diluted EPS of…
- 10-K · February 28, 2025
- Watsco positions itself as the largest HVAC/R distributor in North America with scale (690 locations) and a buy-and-build strategy that produced $7.6 billion of revenues in 2024. The company highlights investments in…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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