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Valued at a market cap of $9.5 billion, A. O. Smith Corporation (AOS) is a global manufacturer of residential and commercial water heating and treatment products, offering innovative and energy-efficient solutions across North America, China, Europe, and India. The company operates under two segments, North America and Rest of World, serving diverse customers through brands like Lochinvar, Aquasana, and State.
Shares of the water heaters and boilers maker have underperformed the broader market over the past 52 weeks. AOS has declined 17.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 17%. Moreover, shares of AOS are down 1.8% on a YTD basis, slightly outpacing SPX’s 1.3% gain.
Focusing more closely, the Milwaukee, Wisconsin-based company has lagged behind the Industrial Select Sector SPDR Fund’s (XLI) 12.2% return over the past 52 weeks and a 2.4% YTD gain.
Shares of A. O. Smith fell 2.8% on Jan. 30 due to weaker-than-expected Q4 adjusted EPS of $0.85 and revenue of $912.4 million, reflecting a decline in sales volume, particularly in North America. Additionally, the company's revenue in China dropped by 4% year-over-year due to weak consumer demand, raising concerns about its international growth prospects. Despite a 6% dividend increase and strong sales growth in India, investors reacted negatively to the overall revenue decline and uncertain outlook in key markets like China.
For the current fiscal year, ending in December 2025, analysts expect AOS’ EPS to grow marginally year-over-year to $3.76. The company's earnings surprise history is mixed. It topped or met the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 11 analysts covering the stock, the consensus rating is a “Hold.” That’s based on three “Strong Buy” ratings, seven “Holds,” and one “Strong Sell.”
On Jan. 31, UBS analyst Damian Karas lowered A. O. Smith’s price target to $74 while maintaining a “Neutral” rating, citing weak Q4 results and flat EPS guidance for 2025.
As of writing, AOS is trading below the mean price target of $74.56. The Street-high price target of $84 implies a potential upside of 25.4% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
