Equipment distributor Watsco (NYSE:WSO) will be announcing earnings results tomorrow before market hours. Here’s what to look for.

Watsco missed analysts’ revenue expectations by 4.3% last quarter, reporting revenues of $2.16 billion, up 1.6% year on year. It was a disappointing quarter for the company, with a significant miss of analysts’ adjusted operating income estimates.

Is Watsco a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Watsco’s revenue to grow 3.9% year on year to $1.66 billion, improving from the 1.4% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $2.20 per share.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings.

Looking at Watsco’s peers in the industrial distributors segment, some have already reported their Q4 results, giving us a hint as to what we can expect. DistributionNOW delivered year-on-year revenue growth of 2.9%, beating analysts’ expectations by 3.4%, and MSC Industrial reported a revenue decline of 2.7%, topping estimates by 2.7%. DistributionNOW traded up 21.5% following the results while MSC Industrial’s stock price was unchanged.

Read our full analysis of DistributionNOW’s results here and MSC Industrial’s results here.

Stocks, especially growth stocks where cash flows further in the future are more important to the story, had a good 2024. An economic soft landing (so far), the start of the Fed's rate cutting campaign, and the election of Donald Trump were positives for the market, and while some of the industrial distributors stocks have shown solid performance, the group has generally underperformed, with share prices down 4.6% on average over the last month. Watsco is down 4.2% during the same time and is heading into earnings with an average analyst price target of $477.10 (compared to the current share price of $483.69).

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