Stifel Reviews A. O. Smith (AOS) After Q4 Beat and Mixed 2026 Outlook

Core Viewpoint - A. O. Smith Corporation (NYSE:AOS) has shown resilience with a fourth-quarter earnings beat, although the 2026 revenue outlook is weaker than expected, leading to a mixed market reaction [2][3]. Financial Performance - The company reported an adjusted net income of $125.4 million, or $0.90 per share, for the fourth quarter, up from $109.7 million, or $0.75 per share, a year earlier [4]. - North American sales increased by 3.5% to $713.7 million, driven by pricing strategies and improved profitability in water treatment, which offset higher input costs [4]. - Total revenue for the quarter ended December 31 was $912.5 million, remaining essentially flat compared to the previous year [4]. - A. O. Smith expects full-year earnings per share to range between $3.85 and $4.15 [4]. Market Reaction - Following the earnings report, shares of A. O. Smith rose approximately 5%, attributed to short covering despite the mixed results [2]. Strategic Insights - The company continues to face challenges in China, yet it reported improved margins in that market, indicating potential for strategic partnerships and other options to enhance its business there [3][5].