Watsco Stock Soars 7% Following Promising Earnings Forecast

Why Watsco Stock Is Higher Today

The company believes headwinds will dissipate as the summer heats up. Watsco (NYSE: WSO) investors have endured a series of disappointing earnings announcements, with shares falling following each of the last three reports.

Things could heat up come summer

• Watsco is a distributor of parts and products for the North American heating, air conditioning, and refrigeration (HVAC) market.
• Management sees conditions improving heading into the summer cooling season, giving investors a reason for optimism.

Even when end markets are weak, Watsco can generate cash, allowing the company's board to boost the stock's annual dividend by 10% earlier in the year. Watsco has no debt and had $479 million in cash and short-term investments on its balance sheet as of the quarter's end.

Is Watsco stock a buy following its earnings report?

Before you buy stock in Watsco, consider this:

• With potential growth drivers including the electrification of heating systems and new standards for air conditioners in response to climate change, there is potential for more than just income as well.
• Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Watsco. The Motley Fool has a disclosure policy.