WSO Should I Buy
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Watsco Inc (WSO) is not a strong buy for a beginner investor with a long-term strategy at this moment. The stock exhibits mixed signals, with declining financial performance, neutral trading sentiment, and limited positive catalysts. While the technical indicators are neutral, the upcoming earnings report and recent downward revisions in revenue and EPS estimates add uncertainty. For a beginner investor, it is better to wait for clearer growth signals or a more favorable entry point.
The stock's MACD is positive but contracting, RSI is neutral at 56.392, and moving averages are converging, indicating no clear trend. Key support is at 388.738, and resistance is at 430.142. The stock is trading near resistance levels, with a 40% chance of a slight gain in the next day but a higher probability of declines in the next week (-3%) and month (-7.85%).
Giverny Capital Asset Management has added Watsco to its portfolio, indicating some institutional interest. Gross margin increased by 5% YoY in Q3 2025, showing operational efficiency improvement.
EPS and revenue estimates for Q4 have seen more downward revisions than upward ones. Analysts have lowered price targets, and the stock has a Neutral rating from most firms. The upcoming earnings report is expected to show a 7.4% YoY revenue decline, adding uncertainty.
In Q3 2025, revenue dropped by 4.31% YoY to $2.067 billion, net income decreased by 5.19% YoY to $150.868 million, and EPS declined by 5.69% YoY to $3.98. However, gross margin improved by 5% YoY to 27.52%.
Analysts have a Neutral rating on Watsco, with price targets recently adjusted downward to $370. While some analysts see potential growth in 2026, they note uneven terrain and conservative guidance, limiting near-term upside.
