What happened with WSO-B today?
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Uses news and trading volume to explain the day’s move and how it relates to the market.
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Watsco, Inc. buys equipment and supplies from manufacturers and sells them to contractors who replace or install systems in homes and commercial buildings. Contractors collect orders from its warehouses or receive deliveries. Air-conditioning and heating equipment generates most revenue; related parts and installation supplies contribute much of the rest, with commercial refrigeration a smaller business. Most sales come from the United States, and no single customer accounts for a large share.
The business depends heavily on Carrier, which supplies most of Watsco’s purchases and is its partner in joint ventures that generate most revenue. Maintaining product availability therefore relies heavily on that relationship. Some distribution agreements grant exclusive territories, while some branded-product agreements limit sales of competing products at the locations concerned.
Demand depends on replacement needs and new construction. Summer and winter weather affect seasonal sales, while housing completions influence demand for systems in new homes.
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Every company claims an edge. Each one is checked against hard numbers like margins and returns: which hold, and which line gives way first.
Watsco’s results hinge on demand for replacement heating and cooling systems and a concentrated supplier base, including privately held Rheem, which accounts for 8% of its purchases.
Watsco depends heavily on Carrier for the heating and cooling equipment it sells to contractors: Carrier supplied 62% of its purchases in 2025 and co-owned distribution ventures generating 53% of its revenue. Watch Carrier’s equipment deliveries, since interruptions could leave Watsco short of inventory and hurt its results.
Lennox both supplies heating and cooling equipment to Watsco and competes with it through Lennox Stores for contractors buying systems, replacement parts and supplies. Its store-channel news is worth watching for competition over the same contractor spending that supports Watsco’s sales.
Ferguson competes with Watsco in distributing heating and cooling products to residential and commercial customers in overlapping U.S. and Canadian markets. Watch Ferguson’s same-day and next-day product availability in the U.S., a service it identifies as an important customer requirement and a competitive advantage.
Watsco, Inc. earningsThis company
Watsco sells HVAC equipment to contractors, and its report will show whether their purchases are recovering and whether equipment pricing and sales mix still support gross margin.
Read same-store sales alongside gross margin; same-store sales compare locations on a like-for-like basis. A narrowing sales decline with a steady margin would show contractor purchases improving while pricing or product mix still supports profit on each sale. A deeper decline or falling margin would show weak demand or less favorable pricing and mix weighing on the distributor’s earnings.
Lennox International Inc. earningsLII
Lennox International’s report will show whether contractors are buying HVAC systems and parts through its own stores, revealing how actively it competes with Watsco for their business.
Look for Lennox’s own-store sales or other store-channel evidence, alongside signs of contractor purchases of systems, replacement parts and supplies. Stronger store sales and buying activity would mean tougher competition for the same contractor spending and more pressure on Watsco’s distribution sales. Weaker activity would suggest less pressure from this direct rival, not proof that Watsco’s own sales are recovering.
Housing Starts (Oct)
Watsco sells HVAC equipment and supplies to contractors for new homes, so housing construction that leads to completions can change contractors’ purchases and Watsco’s sales.
More homes started or permitted points to stronger building activity, which may support contractor purchases of Watsco’s HVAC equipment and supplies if it leads to completions; fewer points to weaker activity and potentially less purchasing.
