Watsco (WSO) Unit Acquires 35% Ownership Of Russell Sigler

Watsco, Inc. (NYSE:WSO) recently declared that its Carrier Enterprise business unit has acquired 35% ownership of Russell Sigler, Inc., for around $63.6 million. The move is in sync with Watsco’s strategic efforts to collaborate with well-established businesses and will strengthen its presence in the significant Western U.S. markets.

Founded in 1950, Russell Sigler is one of the largest HVAC (Heating, ventilation and air conditioning) distributors in North America, with annual sales of approximately $650 million. The company sells residential and commercial HVAC equipment manufactured by Carrier, along with parts, supplies and accessories sourced from over 700 vendors.

Watsco has exclusive rights to purchase ownership interests from the current shareholders which may elect to sell in the future.

The Carrier Enterprise business unit is a joint venture between Watsco and Carrier. Carrier is part of UTC Climate, Controls & Security, a unit of United Technologies Corp. (NYSE:UTX) , a leading global provider to aerospace and building systems industries.

Watsco has immense growth potential in the replacement market, given an aging stock of air conditioners and heating systems in the U.S. The company will benefit from the expansion of its product offering, as well as logistical and productivity improvements.

In the last one year, Watsco has underperformed the Zacks classified Building Products - Air Conditioner and Heating sub-industry with respect to price performance, affected by foreign currency headwinds and seasonal factors. The stock gained around 12%, while the industry gained 19.6% over the same time frame.

Watsco currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the construction sector include NCI Building Systems, Inc. (NYSE:NCS) and Tecogen Inc. (NASDAQ:TGEN) . Both the stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NCI Building has an average positive earnings surprise of 11.28% for the trailing four quarters. Tecogen generated an impressive average positive earnings surprise of 112.50% over the last four quarters.

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