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A. O. Smith Corporation (NYSE:AOS) shareholders are probably feeling a little disappointed, since its shares fell 4.6% to US$67.30 in the week after its latest annual results. It looks like the results were a bit of a negative overall. While revenues of US$3.8b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.7% to hit US$3.63 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for A. O. Smith
Taking into account the latest results, A. O. Smith's 13 analysts currently expect revenues in 2025 to be US$3.84b, approximately in line with the last 12 months. Per-share earnings are expected to increase 2.3% to US$3.77. Before this earnings report, the analysts had been forecasting revenues of US$3.99b and earnings per share (EPS) of US$4.08 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
It'll come as no surprise then, to learn that the analysts have cut their price target 7.1% to US$75.24. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic A. O. Smith analyst has a price target of US$84.00 per share, while the most pessimistic values it at US$60.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that A. O. Smith's revenue growth is expected to slow, with the forecast 0.5% annualised growth rate until the end of 2025 being well below the historical 7.0% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that A. O. Smith is also expected to grow slower than other industry participants.