US Electrical Equipment & Multi-Industry: EE/MI Morning Note - WSO Preview, Short Interest

Research evidence excerpt

US Electrical Equipment & Multi-Industry: EE/MI Morning Note - WSO Preview, Short Interest

Global Research

6 July 2026ab

US Electrical Equipment & Multi-Industry Equities

AmericasEE/MI Morning Note - WSO Preview, Short

Interest Industrial, Diversified

Amit Mehrotra

Analyst

amit.mehrotra@ubs.com

WSO Preview- We expect Watsco's 2Q results to track largely in line with expectations. +1-201-352 1410

We expect same store sales growth to turn positive on easier comp and positive pricing,

Neal Burk

while underlying volume remains roughly flat to down modestly. OEM pricing actions

should support sequential gross margin improvement, though margins are still likely to neal.burk@ubs.com

remain below prior year levels given more favorable pricing dynamics last year. We also +1-212-713 4066

incorporate the Jackson Supply acquisition in our model following its completion in early

Pratap Singh

June. Details on the quarter are as follows -

We model 2Q EPS of $4.47, 2% above consensus. Our forecast assumes 2% same pratap-za.singh@ubs.com

+1-212-821 3112 store sales growth, a 1% M&A contribution, and 12.5% operating margin, down

70bps year over year. Zachary Walljasper

Associate Analyst

We expect gross margin to improve 40 bps sequentially, diverging from normal zachary.walljasper@ubs.com

seasonality due to OEM pricing actions. However, gross margin should still be +1-212-713 9829

down 100bps year over year, reflecting stronger pricing benefit last year while

some OEMs have delayed price increases until July this year.

We also incorporate Jackson Supply following its early June closing. The business

generated $230 million of revenue in 2025 with 9-10% operating margin. We

also add approximately 0.5 million shares to reflect stock based consideration

related to the deal.