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With a market cap of $9.4 billion, A. O. Smith Corporation (AOS) applies technologies and solutions to products manufactured and marketed worldwide. The Milwaukee, Wisconsin-based company manufactures and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks, and water treatment products in North America, China, Europe, and India.
Companies valued at less than $10 billion are generally described as “mid-cap” stocks and A. O. Smith fits this criterion perfectly. The company is the largest manufacturer and marketer of water heaters in North America, offering its products under the A. O. Smith, State, Lochinvar, Hague, Water-Right, Master Water, Atlantic Filter, and Water Tec brands.
However, the company declined 29.3% from its 52-week high of $92.44. Over the past three months, AOS edged down 4.5%, performing weaker than the iShares U.S. Industrials ETF’s (IYJ) 3.6% decrease.
Longer term, AOS has fallen 4.2% YTD, whereas IYJ ticked down 2.5%. Moreover, shares of A. O. Smith have dipped 26.9% over the past 52 weeks, lagging behind IYJ’s 3.6% return over the same time frame.
Since October 2024, the stock has been trading below its 50-day and 200-day moving averages.
Shares of AOS fell 2.8% with its Q4 2024 results on Jan. 30. The company underperformed Wall Street expectations in Q4, posting an adjusted EPS of $0.85, missing the estimated $0.89. Revenue also fell short, reaching $912.4 million against the projected $952.1 million. Also, the segmental earnings were down 12.5% year-over-year to $147.9 million, which was due to lower water heater volumes. For fiscal year 2025, the company expects net sales to be in the range of $3.8 billion - $3.9 billion, along with its adjusted EPS to lie between $3.60 and $3.90.
Additionally, in comparison, rival AMETEK, Inc. (AME) has outperformed AOS over the past 52 weeks, dropping 5.9%.
As AOS has underperformed relative to its industry peers over the past year, analysts are cautious about its prospects. The stock has a consensus rating of “Hold” from the 11 analysts covering the stock. As of writing, it is trading below the mean price target of $74.56.
