Core Viewpoint - The market anticipates a year-over-year decline in Watsco's earnings due to lower revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Watsco is expected to report quarterly earnings of $1.94 per share, reflecting an 18.1% decrease year-over-year, and revenues of $1.61 billion, down 8.3% from the previous year [3]. - The consensus EPS estimate has been revised down by 8.61% over the last 30 days, indicating a bearish sentiment among analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a negative Earnings ESP of -3.69% for Watsco, suggesting analysts have become more pessimistic about the company's earnings prospects [12]. - Watsco currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, Watsco was expected to earn $4.21 per share but only achieved $3.98, resulting in a surprise of -5.46% [13]. - Over the past four quarters, Watsco has only beaten consensus EPS estimates once [14]. Comparative Industry Analysis - Ingersoll Rand, another player in the manufacturing industry, is expected to post earnings of $0.91 per share, indicating an 8.3% year-over-year increase, with revenues projected at $2.05 billion, up 7.8% [18][19]. - Ingersoll Rand has a positive Earnings ESP of +0.82% and a Zacks Rank of 3, suggesting a higher likelihood of beating consensus EPS estimates [19][20].

Core Insights - Giverny Capital Asset Management's portfolio returned 0.01% in Q4 2025, underperforming the S&P 500's 2.66% return, and YTD returns were 12.58% compared to the Index's 17.88% [1] - The firm faced challenges due to its underweight in large technology companies and overweight in smaller niche leaders, which negatively impacted performance [1] - The market's focus on AI investments has overshadowed the earnings growth and capital returns of portfolio companies, leaving the actual benefits unclear [1] Company Highlights - Watsco, Inc. (NYSE:WSO) was highlighted as a new portfolio holding, being the largest distributor of HVAC systems in the U.S. [2][3] - As of January 30, 2026, Watsco's stock closed at $386.45 per share, with a one-month return of 9.51%, but a three-month loss of 19.05% [2] - Watsco has a market capitalization of $15.72 billion [2] Investment Position - Giverny Capital initiated a 3.5% position in Watsco, emphasizing its important relationship with Carrier and distribution of products from other manufacturers like Rheem and Daikin [3] - Watsco is not among the 30 most popular stocks among hedge funds, with 34 hedge fund portfolios holding it at the end of Q3, unchanged from the previous quarter [4] - While Watsco is acknowledged as a potential investment, the firm believes certain AI stocks present greater upside potential and less downside risk [4]

Company Overview - Watsco, Inc. is the largest distributor in the $106 billion North American HVAC/R market, having entered distribution in 1989 [4] - The company has achieved a 17% compounded annual total-shareholder return through strong organic growth and the acquisition of over 70 market-leading businesses [4] - Watsco's solid financial position and culture of innovation have enabled investments in long-term growth, including industry-leading technology platforms [4] Digital Engagement and AI Initiatives - More than 72,000 contractors, installers, and technicians engage digitally with Watsco, resulting in improved growth and lower attrition [4] - The company is advancing AI-driven initiatives to leverage extensive data assets, enhancing customer experience and improving efficiencies [4] - These investments position Watsco to capture market share as contractors increasingly adopt digital tools and data-driven solutions [4] Upcoming Conference Call - Watsco has scheduled a conference call to discuss its 2025 fourth quarter performance and annual results on February 17, 2026, at 10:00 a.m. (ET) [1] - Earnings results will be released before the market opens on the same day, and a replay of the conference call will be available on the company's website [2] - Investors and analysts are encouraged to pre-register for the conference call to gain immediate access [3]

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Core Viewpoint - Watsco, Inc. (WSO) shares are expected to cool off after a period of strong performance in the fragmented A/C unit industry, suggesting a potential shift in market dynamics [1]. Group 1: Company Performance - Watsco, Inc. has seen its share performance significantly outpace the market, indicating strong growth and investor interest [1]. Group 2: Industry Context - The A/C unit industry is characterized as fragmented, which may present both opportunities and challenges for companies operating within it [1].

Group 1 - UBS has resumed coverage of Watsco (WSO) with a Neutral rating and a price target of $370, which is a decrease from the previous target of $390 [1] - Conversations with 20 Multi-Industry companies indicate that Q4 reporting is not expected to be a significant catalyst, as full-year expectations are already well calibrated and December commentary limits the potential for surprises [1] - Initial guidance for 2026 may be conservative, suggesting there could be upside opportunities later on [1]

Core Insights - Qualivian Investment Partners' Q3 2025 investor letter indicates strong fund performance, outperforming the iShares MSCI USA Quality Factor ETF by 69.2% gross and 61.3% net since inception, and exceeding the S&P 500 by 32.7% gross and 26.1% net [1] Company Performance - Watsco, Inc. (NYSE:WSO) reported a one-month return of 1.01% but experienced a significant decline of 29.63% over the last 52 weeks, with a closing stock price of $345.76 and a market capitalization of $14.062 billion as of December 23, 2025 [2] - In Q3 2025, Watsco's revenue and EPS fell short of analysts' estimates, declining 4% and 6% year-over-year respectively, attributed to challenging market conditions and lower equipment unit volumes [3] - Despite the revenue and EPS misses, Watsco achieved a record gross profit margin of 27.5% due to pricing gains and reported record operating cash flow of $355 million while maintaining a debt-free balance sheet [3] - Management indicated that substantial one-time costs related to the A2L refrigerant transition are largely complete, paving the way for anticipated efficiency improvements in 2026 [3] - Watsco is set to host an Investor Day on December 13 to discuss key growth initiatives aimed at reaccelerating growth in 2026 [3] Investment Sentiment - Watsco, Inc. is not among the 30 most popular stocks among hedge funds, with 34 hedge fund portfolios holding the stock at the end of Q3, unchanged from the previous quarter [4] - While Watsco is recognized for its investment potential, the company is compared unfavorably to certain AI stocks that are perceived to offer greater upside potential and lower downside risk [4]

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Core Points - The company expresses pride in its team and ongoing investments, highlighting the importance of engaging with its audience [1][2] - The interactive nature of the meeting is encouraged, aiming to foster a lively discussion [2] - A cautionary statement regarding forward-looking statements is mentioned, referencing the potential for actual results to differ from projections [3] Group 1 - The company is excited about its current initiatives and the team involved [1] - The meeting is designed to be interactive, inviting questions and comments from participants [2] - A legal disclaimer is provided regarding forward-looking statements, emphasizing the need for caution in interpreting future projections [3]

Summary of Watsco (NYSE: WSO) 2025 Investor Day Company Overview - **Company**: Watsco, a leading distributor of HVAC (heating, ventilation, and air conditioning) products in North America, with a history dating back to 1972 when it was founded by William Wagner [5][6] - **Current Status**: The company has grown from $4 million in sales to approximately $7.5 billion, with a goal of reaching $10 billion in sales [22] Key Themes and Goals - **Growth Strategy**: The company aims for a new target of $10 billion in sales, 30% gross margins, and five inventory turns, referred to as "10, 30, and 5" [22][23] - **Digital Transformation**: Watsco emphasizes the integration of technology into its operations, evolving into a technology-driven company that sells HVAC products [10][19] Technology and Data Utilization - **Data-Driven Business**: Watsco has transitioned to a data-driven model, utilizing extensive data from various sources to enhance decision-making and operational efficiency [16][19] - **Product Information Management (PIM)**: The company has developed a comprehensive PIM database containing detailed information on approximately 200,000 SKUs, which aids in customer service and sales [17][35] - **E-commerce Growth**: Watsco's digital sales have reached $2.5 billion, with significant portions of sales processed through digital channels, showcasing a shift in customer interaction [31] Customer Engagement and Support - **Customer-Centric Approach**: The company focuses on enhancing customer experience through digital tools, including chat support and mobile applications, allowing for seamless interactions [33][42] - **Training and Development**: Watsco offers training programs for contractors, covering technical skills and business management, to foster growth and operational excellence [50][51] Competitive Advantage - **Stickiness of Relationships**: The integration of digital tools creates a strong bond with customers, making it difficult for them to switch to competitors [66][68] - **Collaborative Ecosystem**: Watsco promotes collaboration among its business units to unlock new value and drive growth [23][57] Future Outlook - **AI Integration**: The company is exploring AI applications to further enhance customer service and operational efficiency, positioning itself at the forefront of technological advancements in the industry [19][56] - **Continuous Improvement**: Watsco is committed to ongoing enhancements in its digital ecosystem, with plans for future developments to improve customer experience and operational capabilities [56] Additional Insights - **Historical Context**: The company has a rich history of growth through acquisitions, having integrated around 70 businesses over the years, which has shaped its current market position [8][9] - **Cultural Tenets**: Watsco emphasizes long-term thinking and a cautious approach to risk, avoiding large-scale ERP conversions that could jeopardize the business [12][13] This summary encapsulates the key points discussed during the Watsco 2025 Investor Day, highlighting the company's growth strategies, technological advancements, customer engagement initiatives, and future outlook.