Zacks Investment Research downgraded shares of Watsco (NYSE:WSO) from a hold rating to a sell rating in a research report report published on Friday morning.

According to Zacks, “Shares of Watsco have underperformed the industry in the past year. Earnings estimates for 2018 and 2019 have also been trending downward over the past 60 days. Watsco’s digitization of business has substantially increased the SG&A over the past three years. In-fact, these incremental annual costs of SG&A investments are anticipated to reach approximately $25 million in the coming quarters. Also, fluctuations in sales due to seasonal demand of residential air conditioners and heating equipment hurt its profitability significantly. Moreover, weak contribution from Florida and Mexico also raises concern. Although Watsco is poised to benefit from strong unit demand, higher pricing and sales mix, and continued investment in the technologies, we wait for better visibility.”

A number of other research firms also recently commented on WSO. ValuEngine upgraded Watsco from a hold rating to a buy rating in a research note on Tuesday, September 11th. JPMorgan Chase & Co. downgraded Watsco from a neutral rating to an underweight rating and lifted their price target for the stock from $166.00 to $176.00 in a research note on Friday, September 21st. Buckingham Research began coverage on Watsco in a research note on Tuesday, October 9th. They issued a neutral rating and a $187.00 price target for the company. Finally, Jefferies Financial Group began coverage on Watsco in a research note on Friday, October 12th. They issued a hold rating and a $160.00 price target for the company. Two investment analysts have rated the stock with a sell rating, seven have given a hold rating and two have given a buy rating to the company’s stock. Watsco currently has an average rating of Hold and an average price target of $182.38.

Shares of Watsco stock traded down $2.25 during trading hours on Friday, hitting $152.05. 336,847 shares of the company’s stock traded hands, compared to its average volume of 281,319. The company has a market capitalization of $5.77 billion, a PE ratio of 27.75, a P/E/G ratio of 1.91 and a beta of 0.93. Watsco has a twelve month low of $138.61 and a twelve month high of $192.94.

Watsco (NYSE:WSO) last announced its earnings results on Thursday, October 25th. The construction company reported $2.11 earnings per share for the quarter, missing the consensus estimate of $2.26 by ($0.15). The business had revenue of $1.30 billion for the quarter, compared to analyst estimates of $1.31 billion. Watsco had a net margin of 5.15% and a return on equity of 14.00%. During the same quarter in the prior year, the business earned $1.82 earnings per share. As a group, sell-side analysts expect that Watsco will post 6.46 earnings per share for the current year.

Several institutional investors and hedge funds have recently added to or reduced their stakes in WSO. Charles Schwab Investment Advisory Inc. bought a new stake in shares of Watsco during the second quarter valued at approximately $111,258,000. Capital World Investors raised its holdings in Watsco by 29.6% during the third quarter. Capital World Investors now owns 1,579,500 shares of the construction company’s stock worth $281,309,000 after purchasing an additional 360,715 shares in the last quarter. United Services Automobile Association raised its holdings in Watsco by 5,047.4% during the second quarter. United Services Automobile Association now owns 253,819 shares of the construction company’s stock worth $15,176,000 after purchasing an additional 248,888 shares in the last quarter. Point72 Asset Management L.P. bought a new stake in Watsco during the third quarter worth approximately $25,061,000. Finally, BlackRock Inc. raised its holdings in Watsco by 2.7% during the second quarter. BlackRock Inc. now owns 3,727,767 shares of the construction company’s stock worth $664,588,000 after purchasing an additional 99,687 shares in the last quarter. 80.68% of the stock is currently owned by institutional investors.

About Watsco

Watsco, Inc, together with its subsidiaries, distributes air conditioning, heating, and refrigeration equipment; and related parts and supplies in the United States, Canada, Mexico, and Puerto Rico. It offers residential ducted and ductless air conditioners; gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment.

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