Watsco, Inc. WSO is slated to report third-quarter 2022 results on Oct 20 before market open.
In the last reported quarter, the company’s earnings and sales missed the Zacks Consensus Estimate by 1.8% and 1.7%, respectively. On a year-over-year basis, earnings and sales increased 33% and 15%, respectively.
Watsco’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, with the average being 19.4%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings dropped 0.7% to $4.43 from $4.46 per share in the past 30 days. The estimated figure indicates 22.4% growth from the year-ago earnings of $3.62 per share. The consensus mark for revenues is pegged at $2.02 billion, suggesting 13.4% year-over-year growth.
Watsco, Inc. Price and EPS Surprise
Watsco, Inc. price-eps-surprise | Watsco, Inc. Quote
Factors to Note
Watsco’s North American HVAC/R business is expected to have witnessed moderating demand, thanks to the Fed’s actions to curb inflation and the consequential economic slowdown. Price pressure on raw materials and supply chain disruptions are additional concerns.
Watsco has been aggressively investing in technologies to transform customer experience through e-commerce. The technology deployment will help the company improves order fill rates with speed and accuracy. Watsco has been adjusting business per customers’ needs, reducing costs in affected markets and improving efficiency. This is likely to have added benefits to the company’s third-quarter results.
Acquisitions have also been a vital part of WSO’s strategy. Business combinations are one of the preferred modes of solidifying the product portfolio and leveraging new business opportunities. Also, a higher sales mix of high-efficiency systems, improved margins and operating efficiencies are expected to have added positives to Watsco’s quarterly performance.
What the Zacks Model Unveils
Our proven model does not conclusively predicts an earnings beat for Watsco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Currently, it has a Zacks Rank #2 and an Earnings ESP of -4.86%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks with Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.
PulteGroup, Inc. PHM has an Earnings ESP of +1.75% and a Zacks Rank #3.
PHM’s earnings topped the consensus mark thrice but missed the same on one occasion, with the average surprise being 5.6%. Earnings for the to-be-reported quarter are expected to increase 51.7% year over year.
Boise Cascade Co. BCC has an Earnings ESP of +3.29% and a Zacks Rank #1.
BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 27.1%. Earnings for the to-be-reported quarter are expected to increase 92.6% year over year.
KBR, Inc. KBR has an Earnings ESP of +1.60% and a Zacks Rank #3.
KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 11.5%. Earnings for the to-be-reported quarter are expected to decline 1.6% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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