Dj A.O. Smith Corp. Stock Underperforms Thursday When Compared To Competitors

A. O. Smith Corporation’s AOS fourth-quarter 2024 adjusted earnings of 85 cents per share missed the Zacks Consensus Estimate of 89 cents. The bottom line decreased 12% on a year-over-year basis.

Net sales of $912.4 million also missed the consensus estimate of $952 million. The top line decreased 8% year over year due to lower water heater volumes and decreased sales in China.

For 2024, AOS reported net sales of $3.82 billion, which decreased 1% year over year. For the year, the company’s adjusted earnings were $3.73 per share, down 2% year over year.

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Segmental Details

A. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) decreased 7% year over year to $689.8 million. Our estimate for segmental revenues was $724.0 million. This downtick was caused by lower water heater volumes.

Segmental earnings inched down 12.5% year over year to $147.9 million, primarily due to lower water heater volumes.

Quarterly sales in the Rest of the World (including China, India and Europe) segment declined 9% year over year at $236.6 million. Our estimate for sales in the segment was $233.1 million. Sales declined due to lower sales in China. Sales in India increased 11% in local currency.

The segment’s earnings were $7.8 million, down 70.7% year over year due to lower sales volumes in China.

A. O. Smith Corporation Price, Consensus and EPS Surprise

A. O. Smith Corporation price-consensus-eps-surprise-chart | A. O. Smith Corporation Quote

AOS’ Margin Details

A.O. Smith’s cost of sales was $574.3 million, down 7.1% year over year. Selling, general & administrative expenses were $182.0 million, down 1.6%.

Gross profit decreased 8.6% year over year to $338.1 million. The gross margin was 37.1% compared with 37.4% in the year-ago period. Interest expenses were $2.4 million, up from $1.1 million from the year-ago quarter.

A.O. Smith’s Liquidity & Cash Flow

As of Dec. 31, 2024, AOS’ cash and cash equivalents totaled $239.6 million compared with $339.9 million at the end of December 2023.

At the end of the quarter, long-term debt was $183.2 million compared with $117.3 million at the end of December 2023.

In 2024, cash provided by operating activities totaled $581.8 million compared with $670.3 million in the year-ago period.

AOS’ Share Repurchases

In 2024, A.O. Smith repurchased 3.8 million shares for $305.8 million. Exiting December 2024, 1.7 million shares were left to be repurchased under the existing share repurchase authorization. In January 2025, AOS’ board boosted the existing share buyback program by authorizing the repurchase of an additional 5 million shares.

A.O. Smith’s 2025 Outlook

A.O. Smith has issued the sales outlook for 2025. The company expects net sales to be in the range of $3.8-$3.9 billion. It reported sales of $3.82 billion in 2024.

Management currently projects adjusted earnings per share to be in the band of $3.60-$3.90. The company reported earnings of $3.63 per share in 2024.

AOS’ Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Tetra Tech, Inc. TTEK reported earnings of $0.35 per share in the first quarter fiscal 2025 (ended December 2024), which beat the Zacks Consensus Estimate of $0.34 . This compares with earnings of $0.28 per share a year ago.

Tetra posted revenues of $1.2 billion for the quarter ended December 2024, surpassing the consensus estimate by 8.85%. This compares with year-ago revenues of $1.02 billion. The company has topped the consensus estimate for revenues in each of the last four quarters.

Waste Management, Inc. WM reported earnings of $1.70 per share in the fourth quarter of 2024, which missed the Zacks Consensus Estimate of $1.79 . This compares with earnings of $1.74 per share a year ago.

WM reported revenues of $5.89 billion for the quarter ended December 2024, surpassing the consensus estimate by 0.18%. This compares with year-ago revenues of $5.22 billion. The company has topped the consensus estimate for revenues in two of the last four quarters.

Packaging Corporation of America PKG reported adjusted earnings per share of $2.47 in the fourth quarter of 2024, which missed the Zacks Consensus Estimate of $2.51 by a margin of 2%. The bottom line matched PKG’s guidance and grew 16% year over year.

Sales in the fourth quarter rose 10.7% year over year to $2.15 billion due to higher volumes and price/mix in both segments. The top line beat the consensus estimate of $2.13 billion.

Zacks Investment Research

A.O. Smith (AOS) reported $912.4 million in revenue for the quarter ended December 2024, representing a year-over-year decline of 7.7%. EPS of $0.85 for the same period compares to $0.97 a year ago.

The reported revenue represents a surprise of -4.17% over the Zacks Consensus Estimate of $952.05 million. With the consensus EPS estimate being $0.89, the EPS surprise was -4.49%.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how A.O. Smith performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Geographic Revenue- North America: $689.80 million versus $730.99 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a -6.5% change.
• Geographic Revenue- Inter-segment sales: -$14 million versus the five-analyst average estimate of -$12.80 million. The reported number represents a year-over-year change of +38.6%.
• Geographic Revenue- Rest of World: $236.60 million compared to the $234.62 million average estimate based on five analysts. The reported number represents a change of -9.1% year over year.
• Segment Operating Earnings (GAAP)- Corporate expense: -$8.20 million compared to the -$15.72 million average estimate based on four analysts.

View all Key Company Metrics for A.O. Smith here>>>

Shares of A.O. Smith have returned +1.5% over the past month versus the Zacks S&P 500 composite's +1.2% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

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