Watsco posts record Q3 revenue but EPS miss, shares slide
Watsco Inc. reported third‑quarter 2026 revenue of $2.22 billion, up 7% year‑over‑year and beating estimates. Adjusted earnings per share came in at $3.77, falling short of the analyst consensus of $4.12. Operating income declined 4% to $225 million as gross margin slipped to 26.4% and operating margin to 10.1%. The company completed acquisitions of Jackson Supply and The Granite Group, which together are expected to add about 10% to annual revenue, and its nine‑month operating cash flow jumped 79% to $304 million.
Why it matters
The earnings miss drove Watsco shares down roughly 4% in after‑hours trading, reflecting investor concern over margin compression. However, the strong cash‑flow generation and revenue‑boosting acquisitions may support future growth, as noted by the CEO.
Key facts
- 1Revenue was $2.22 billion, up 7% YoY and slightly above the $2.2 billion estimate. investing.com
- 2Adjusted EPS was $3.77, missing the consensus estimate of $4.12. investing.com
- 3Operating income was $225 million, a 4% decline year‑over‑year. investing.com
- 4Gross profit margin fell to 26.4% from 27.5% in the prior‑year period. investing.com
- 5Operating margin was 10.1%, down from 11.4% YoY. finance.yahoo.com
- 6Operating cash flow increased 79% to $304 million for the nine‑month period. investing.com
Summary written by AlphAI AI Desk from 8 of 8 sources. Not investment advice. Figures are as stated by the linked sources.