Watsco 2025 Q3 Earnings Revenue and EPS Decline Amid Supply Chain Challenges

Watsco (WSO) reported fiscal 2025 Q3 earnings on November 8, 2025, with results falling short of expectations. The company posted $3.98 earnings per share, missing the consensus estimate of $4.60, while revenue of $2.07 billion declined 4.3% year-over-year. Guidance for full-year 2025 revenue and EPS aligned with Q3 results, maintaining a cautious outlook amid ongoing supply chain headwinds.

Revenue

The total revenue of Watsco decreased by 4.3% to $2.07 billion in 2025 Q3, down from $2.16 billion in 2024 Q3.

Earnings/Net Income

Watsco's EPS declined 6.1% to $3.98 in 2025 Q3 from $4.24 in 2024 Q3. Meanwhile, the company's net income declined to $189.23 million in 2025 Q3, down 6.2% from $201.65 million reported in 2024 Q3. The earnings shortfall reflects persistent operational pressures, with the EPS decline signaling underperformance relative to market expectations.

Price Action

The stock price of Watsco has edged up 1.00% during the latest trading day, has dropped 4.45% during the most recent full trading week, and has tumbled 11.30% month-to-date.

Post-Earnings Price Action Review

Following the earnings release, Watsco’s stock experienced mixed short-term performance. While the stock closed the day up 1.00%, reflecting cautious optimism around strategic initiatives, broader market concerns led to a 4.45% weekly decline and an 11.30% monthly drop. Analysts attributed the volatility to the earnings miss, revenue shortfall, and UBS Group’s revised price target of $390.00. Institutional investors also adjusted holdings, with some hedge funds increasing positions in Q3 amid speculation about the company’s long-term resilience.

CEO Commentary

John D. Morik, CEO of Watsco, highlighted strong business performance driven by robust demand in HVAC markets and strategic acquisitions, though he acknowledged supply chain challenges as a key headwind. He emphasized strategic priorities, including expanding the company’s footprint through targeted investments in digital tools and customer service enhancements to solidify market positioning. Morik expressed cautious optimism about the outlook, noting resilience in core markets but stressing the importance of agile execution to navigate macroeconomic uncertainties.

Guidance

Watsco guided to full-year 2025 revenue of approximately $2.07 billion and EPS of $3.98, aligning with Q3 results. The CEO reiterated confidence in maintaining disciplined capital allocation, with CAPEX targeting 4-5% of revenue, while prioritizing operational efficiency and margin expansion through cost optimization initiatives.

Additional News

UBS Group cut its price target for Watsco from $425.00 to $390.00 on November 7, maintaining a "neutral" rating. The adjustment followed the company’s Q3 earnings miss and revenue shortfall, which disappointed investors. Analyst sentiment remained divided, with one "Buy," nine "Hold," and one "Sell" ratings. Morgan Stanley and Mizuho also revised their targets downward, reflecting broader skepticism about near-term growth. Institutional investors adjusted stakes, with SJS Investment Consulting Inc. significantly increasing holdings by 2,366.7% in Q3. These developments underscore market uncertainty despite the CEO’s emphasis on strategic resilience.