What happened
Shares of Watsco (WSO -1.94%), a company specializing in heating, ventilation, and air conditioning (HVAC), rose quickly at the start of trading on April 20, gaining as much as 12% early in the day. The catalyst for the price move was the company's first-quarter-2023 earnings release, which hit the market before the open. The gain cooled as the day progressed, with the advance sitting at around 5% by 11 a.m. ET. But that really doesn't change the story here because Watsco did have a very respectable quarter.
So what
First-quarter-2023 sales came in at $1.55 billion, a 2% increase over the same quarter in 2022. That was roughly in line with analyst expectations, but it comes against a period described by management as having "the highest single-quarter growth rates in our history." It is no small feat to report higher sales, even if only modestly, against a record-breaking first quarter in 2022.
Image source: Getty Images.
On the bottom line, the industrial company reported earnings of $2.83 per share. That was down from $2.90 in the first quarter of 2022, which, as noted, was a tough comparison period. More notable today, though, is that Wall Street was expecting earnings of $2.35 per share. So in the end, it was still a pretty material earnings beat. Investors tend to like it when a company does better than expected, so it isn't shocking that the stock is higher today.
Now what
When you step back from the quarter and look at the big picture, it is impressive that Watsco was able to lap a strong quarter in 2022 with a very respectable performance in 2023. That actually bodes quite well for the future as the company's business trends start to return to more normal patterns.
