Is a Beat in Store for A. O. Smith (AOS) in Q1 Earnings?

Zacks Equity Research

April 22, 2024 at 8:28 a.m.·4 min read

A. O. Smith Corporation Price and EPS Surprise

A. O. Smith Corporation AOS is likely to witness top bottom-line growth when it reports first-quarter 2024 results on Apr 25, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $995 million, which suggests growth of 3% from the year-ago quarter’s reported figure.

The consensus mark for earnings is pinned at 99 cents per share, which has improved 1% in the past 60 days. The figure indicates a jump of 5.3% from the figure reported in the year-ago quarter. The company’s bottom line surpassed the Zacks Consensus Estimate by a penny in the last reported quarter. It has a trailing four-quarter earnings surprise of 12%, on average.

Let’s see how things have shaped up for A.O. Smith this earnings season.

Factors to Note

A. O. Smith’s North American segment is expected to have benefited from improving water heater volumes in North America and higher kitchen product sales in China in the first quarter. Also, strong demand for water heater products is likely to have driven the segment’s performance in the quarter. However, lower boiler sales are expected to have weighed on results. We expect revenues from the company’s North American segment to increase 2.4% year over year to $770.6 million in the to-be-reported quarter.

The introduction of kitchen appliance products in China is likely to have boosted the performance of the Rest of the World segment. Our estimate for the segment’s revenues in the quarter is pegged at $226.9 million, indicating a year-over-year increase of 3.6%.

Acquisitions made by A. O. Smith are likely to have impacted its top line positively in first-quarter 2024. In June 2022, the company acquired Atlantic Filter, which boosted its position in the water treatment industry and strengthened its customer base in Florida and the adjacent regions. Also, the acquisition of Canada-based Giant Factories, in October 2021, expanded the company’s commercial water heater offerings.

The first-quarter results are also expected to reflect the benefits of improving supply chains and higher shipments. For the to-be-reported quarter, we expect the company’s revenues to be $989.6 million, indicating an increase of 2.4% year over year. Our estimate for the company’s earnings is pegged at 0.97 cents, indicating a 3% rise from the year-ago reported number.

However, over time, A. O. Smith’s performance has been negatively impacted by high costs and expenses. An increase in raw material cost is likely to have been a spoilsport in the to-be-reported quarter. We expect the company’s selling, general and administrative expenses to escalate 8.9% year over year in the to-be-reported quarter.

A. O. Smith Corporation Price and EPS Surprise

A. O. Smith Corporation price-eps-surprise | A. O. Smith Corporation Quote

Earnings Whispers

Our proven model suggests an earnings beat for AOS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as elaborated below.

Earnings ESP: A. O. Smith has an Earnings ESP of +1.11% as the Most Accurate Estimate is pegged at $1 per share, which is higher than the Zacks Consensus Estimate of 99 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: A. O. Smith carries a Zacks Rank of 3.

Highlights of Q4 Earnings

A. O. Smith’s fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. The bottom line jumped 13% year over year. Net sales of $988.1 million narrowly missed the consensus estimate of $989 million. However, the top line increased 5.6% year over year.

Other Stocks to Consider

Here are some other companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings in this reporting cycle.

AptarGroup, Inc. ATR has an Earnings ESP of +0.59% and a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is scheduled to release first-quarter 2024 results on Apr 25. AptarGroup’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 7.8%.

Crane Company CR has an Earnings ESP of +0.28% and a Zacks Rank of 3. The company is slated to release first-quarter 2024 results on Apr 22.

Crane Company’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 25.1%.

Allegion plc ALLE has an Earnings ESP of +5.69% and a Zacks Rank of 3. The company is slated to release first-quarter 2024 results on Apr 25.

Allegion’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 10.4%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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A. O. Smith Corporation (AOS) : Free Stock Analysis Report

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Factors to Note

A. O. Smith Corporation Price and EPS Surprise

Earnings Whispers

Highlights of Q4 Earnings

Other Stocks to Consider

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