Infrastructure Distributors Stocks Q4 In Review: Watsco (NYSE:WSO) Vs Peers
April 11, 2025
Earnings results often indicate what direction a company will take in the months ahead. With Q4 behind us, let’s have a look at Watsco (NYSE:WSO) and its peers.
Focusing on narrow product categories that can lead to economies of scale, infrastructure distributors sell essential goods that often enjoy more predictable revenue streams. For example, the ongoing inspection, maintenance, and replacement of pipes and water pumps are critical to a functioning society, rendering them non-discretionary. Lately, innovation to address trends like water conservation has driven incremental sales. But like the broader industrials sector, infrastructure distributors are also at the whim of economic cycles as external factors like interest rates can greatly impact commercial and residential construction projects that drive demand for infrastructure products.
The 4 infrastructure distributors stocks we track reported a satisfactory Q4. As a group, revenues were in line with analysts’ consensus estimates.
While some infrastructure distributors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.5% since the latest earnings results.
Watsco (NYSE:WSO)
Originally a manufacturing company, Watsco (NYSE:WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.
Watsco reported revenues of $1.75 billion, up 9.4% year on year. This print exceeded analysts’ expectations by 5.3%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ same-store sales and adjusted operating income estimates.
Albert H. Nahmad, Watsco’s Chairman and CEO, commented: “Watsco had a terrific fourth quarter, achieving record sales and earnings, improved operating efficiency, expanded margins and record cash flow. Looking ahead, the transition to A2L products is well underway, providing incremental opportunities for growth and share gains as our technology platforms gain more adoption in the marketplace. Our teams continue to lead and innovate, and I am optimistic that our industry-leading scale, entrepreneurial culture, technology advantage and financial strength position us to continue to capture growth and share.”
Watsco scored the biggest analyst estimates beat of the whole group. The stock is up 2.8% since reporting and currently trades at $499.
Spun off from National Oilwell Varco, DistributionNOW (NYSE:DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.
DistributionNOW reported revenues of $571 million, up 2.9% year on year, outperforming analysts’ expectations by 3.4%. The business had an incredible quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
The market seems content with the results as the stock is up 4.9% since reporting. It currently trades at $14.83.
Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE:MRC) offers pipes, valves, and fitting products for various industries.
MRC Global reported revenues of $664 million, down 13.5% year on year, falling short of analysts’ expectations by 8.7%. It was a disappointing quarter as it posted a miss of analysts’ Fittings revenue estimates and a significant miss of analysts’ adjusted operating income estimates.
MRC Global delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 9.5% since the results and currently trades at $10.05.
Formerly a division of industrial distributor HD Supply, Core & Main (NYSE:CNM) is a provider of water, wastewater, and fire protection products and services.
Core & Main reported revenues of $1.70 billion, up 17.9% year on year. This result beat analysts’ expectations by 1.7%. Aside from that, it was a slower quarter as it logged a significant miss of analysts’ EPS estimates and a miss of analysts’ adjusted operating income estimates.
Core & Main achieved the fastest revenue growth among its peers. The stock is down 4.2% since reporting and currently trades at $47.51.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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