A. O. Smith Earnings Preview

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Investors hope A. O. Smith (NYS: AOS) will top analyst estimates once again after beating predictions by one cent in the previous quarter. The company will unveil its latest earnings on Friday, Oct. 21. A. O. Smith is a manufacturer of water heating equipment and electric motors, serving a diverse mix of residential, commercial, and industrial end markets mainly in the United States, with a growing international presence.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back A. O. Smith, with nine of 10 rating it a buy and the remainder rating it a hold. Analysts like A. O. Smith better than competitor Babcock & Wilcox Company overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $404.6 million in revenue this quarter. That would represent a decline of 27.7% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.47 per share. Estimates range from $0.38 to $0.51.

What our community says:
CAPS All-Stars are solidly backing the stock, with 95.8% assigning it an outperform rating. The community at large concurs with the All-Stars, with 97.9% granting it a rating of outperform. Fools are keen on A. O. Smith, though the message boards have been quiet lately with only 52 posts in the past 30 days. A. O. Smith has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
A. O. Smith's profit has risen year over year by an average of 67.5% over the past five quarters. Revenue has fallen for the past three quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

27.6%

30.4%

3.6%

26.7%

Operating Margin

9.4%

9%

19.7%

8.5%

Net Margin

12.4%

9.8%

(19.4%)

5.7%

For all our A. O. Smith-specific analysis, including earnings and beyond, add A. O. Smith to My Watchlist.

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At the time this article was published

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