William Blair Says Watsco (WSO) Sell-Off Overdone Despite New Competition

Watsco, Inc. (NYSE:WSO) is included among the 14 Safest Stocks with Highest Dividends.

On March 24, William Blair analyst Ryan Merkel said that shares of Watsco, Inc. (NYSE:WSO) fell 9% after SRS Distribution, part of Home Depot, announced plans to acquire HVAC distributor Mingledorff’s. He pointed to “some negatives” for Watsco, including missing out on one of the key Carrier Global (CARR) distribution assets still available and facing another well-funded competitor in the HVAC distribution M&A space. Even so, he said the negatives “do not come close to justifying the sell-off,” while maintaining a Market Perform rating on the shares.

During the Q4 2025 earnings call, Albert Nahmad, Chairman and CEO, said that 2025 brought meaningful regulatory change tied to the transition to A2L refrigerants. He noted that the company expanded its scale and market share during the year and completed 12 acquisitions, which added more than $1.6 billion in sales.

He also announced a 10% increase in the annual dividend to $13.20. He pointed out that this marked the company’s 52nd consecutive year of dividend payments and reflected management’s confidence in the business. Nahmad added that pricing on new A2L products saw double-digit gains, which lifted gross margins by 40 basis points to 27.1%. At the same time, he said unit volumes declined during the quarter, noting that this was expected after the strong 20% unit growth seen in the prior-year period.

Watsco, Inc. (NYSE:WSO) distributes air conditioning, heating, and refrigeration equipment, along with related parts and supplies. It serves both replacement and new construction markets across residential and commercial applications.

READ NEXT: Dividend Stock Portfolio for Income: 15 Stocks to Invest In and Dividend Capture Strategy: 14 High Yield Stocks to Buy in April

Disclosure: None. Follow Insider Monkey on Google News.