Watsco earnings fell short of analyst expectations in the third quarter of 2026, while revenue rose 7.2% from a year earlier to $2.22 billion. The HVAC equipment distributor reported GAAP earnings of $3.77 per share in results released on October 27.

Key Takeaways

  • Earnings per share missed consensus estimates by $0.32, while revenue exceeded expectations by $10 million.
  • Residential HVAC product sales rose 7%, offsetting a 5% decline in commercial product sales.
  • Watsco shares fell 2% in after-hours trading.

Watsco earnings trail expectations

The quarterly results presented a mixed picture: revenue grew from a year earlier and came in above expectations, but earnings per share missed the consensus estimate. The available figures do not explain the reason for the earnings shortfall.

Watsco distributes heating, ventilation, air conditioning and refrigeration products across the United States, Canada, Mexico and Latin America. It serves residential and light-commercial markets.

Residential sales offset commercial decline

HVAC equipment sales increased 5% and accounted for 67% of total sales. Within the product categories, residential sales grew while commercial sales declined.

Watsco’s dividend yield was 4.17%, and its payout ratio was 1.09. The ratio indicates dividends exceeded net income over the period measured, although the period was not specified. It does not establish whether future payments will change.

Update — 2026-10-27

Watsco, an HVAC/R equipment, parts and supplies distributor, reported that third-quarter gross profit rose 3% to $586 million, even as gross margin fell to 26.4% from 27.5% a year earlier. Operating income fell 4% to $225 million, while diluted earnings per share declined 5% from a year earlier.

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