A. O. Smith Gears Up for Q3 Earnings: What Lies Ahead for the Stock?
A. O. Smith Corporation AOS is set to release third-quarter 2024 results on Oct. 22, before the opening bell.
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The Zacks Consensus Estimate for revenues is pegged at $901.1 million, which indicates a decline of 4% from the year-ago quarter’s figure. The consensus mark for earnings is pinned at 86 cents per share, which has declined 8.5% in the past 60 days. The estimate indicates a decrease of 4.4% from the figure reported in the year-ago quarter. The company’s bottom line missed the Zacks Consensus Estimate by a penny in the last reported quarter. It has a trailing four-quarter earnings surprise of 3.8%, on average.
Factors to Note
A. O. Smith’s North America segment is expected to have been hurt by a decline in orders for residential and commercial water heater products in the North America region in the third quarter. Also, weaker-than-expected orders in both the wholesale and retail channels have been ailing the segment. Per the company’s preliminary results for the third quarter, the segment’s revenues of $703 million indicate a year-over-year decline of 1%.
Decreasing demand for residential water treatment and lower volumes of water heating products in China are likely to have impacted the performance of the Rest of the World segment. Per the company’s preliminary results for the third quarter, the segment’s revenues of $210 million indicate a year-over-year decline of 10%.
AOS has been dealing with escalating costs and expenses for some time now. The increasing cost of sales attributed to higher material costs and rising SG&A expenses due to higher employee costs from increased wages and management incentives are likely to have dented the company’s bottom line in the third quarter. We anticipate the cost of sales to increase 1.5% to $589.8 million and SG&A expenses to rise 3.6% to $181.1 million from the year-earlier levels.
The company has considerable exposure to overseas markets. Given its substantial international operations, foreign currency headwinds are likely to have marred its profitability.
However, acquisitions made by A. O. Smith are likely to have impacted its top line positively. In March 2024, the company acquired privately held water treatment company Impact Water Products, which expanded its water treatment footprint in North America. Impact Water Products is included in the North America segment. In June 2022, it acquired Atlantic Filter, which boosted its position in the water treatment industry and strengthened its customer base in Florida and the adjacent regions.
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 does not conclusively predict 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 not the case here, as elaborated below.
Earnings ESP: AOS has an Earnings ESP of 0.00% as both the Most Accurate Estimate and Zacks Consensus Estimate are pegged at 82 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: AOS presently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Here are some companies, which according to our model, have the right combination of elements to beat on earnings in this reporting cycle.
Ingersoll Rand Inc. IR has an Earnings ESP of +1.34% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release third-quarter results on Oct. 31. Ingersoll’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 11%.
Crane Company CR has an Earnings ESP of +0.63% and a Zacks Rank of 2 at present. The company is slated to release third-quarter results on Oct. 28.
Crane Company’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 11.2%.
Emerson Electric Co. EMR has an Earnings ESP of +0.85% and a Zacks Rank of 3 at present. It is slated to release fiscal fourth-quarter 2024 (ended September 2024) results on Nov. 5.
Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing the mark in one, the average surprise being 6.3%.
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Emerson Electric Co. (EMR) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Ingersoll Rand Inc. (IR) : Free Stock Analysis Report
Crane Company (CR) : Free Stock Analysis Report