Company Overview - A. O. Smith Corporation (AOS) has a market cap of $9.6 billion and is a global manufacturer of water heating and treatment products, serving various sectors including residential, commercial, and industrial applications across North America, China, Europe, and India [1] - The company operates under well-known brands such as A. O. Smith, State, Lochinvar, and Aquasana, utilizing wholesale, retail, and e-commerce channels for product distribution [2] Stock Performance - AOS shares have declined nearly 11% from their 52-week high of $77.31, and over the past three months, the stock has decreased by 6.1%, underperforming the Dow Jones Industrials Average, which rose by 5.5% during the same period [3] - Year-to-date, AOS stock is up marginally, lagging behind the Dow Jones Industrials Average's gain of 13.8%, and has dipped 5.1% over the past 52 weeks compared to the Dow's 10.5% increase [4] Financial Performance - In Q3 2025, AOS reported earnings per share (EPS) of $0.94 and revenue of $942.5 million, exceeding expectations; however, shares fell by 2.6% following the announcement due to a lowered full-year outlook [5] - The company revised its sales guidance to flat to up 1% and narrowed EPS guidance to $3.70 - $3.85, attributing the adjustments to economic weakness in China, where sales declined by 12% in local currency, and a slowdown in new home construction in North America [5] Competitive Landscape - A. O. Smith's rival, GE Vernova Inc. (GEV), has significantly outperformed AOS, with GEV stock surging 107.1% year-to-date and 105.2% over the past 52 weeks [6] - Despite AOS's underperformance, analysts maintain a moderately optimistic outlook, with a consensus rating of "Moderate Buy" from 13 analysts and a mean price target of $78.50, indicating a potential upside of 14.1% from current levels [6]

Core Viewpoint - A. O. Smith Corporation (AOS) is expected to report a decline in both revenue and earnings for the first quarter of 2025, with revenues estimated at $947.3 million, down 3.2% year-over-year, and earnings at 90 cents per share, reflecting a 10% decrease from the previous year [1]. Group 1: Earnings Estimates - The Zacks Consensus Estimate for AOS's revenues is $947.3 million, indicating a 3.2% decline from the same quarter last year [1]. - The consensus estimate for earnings is 90 cents per share, which has remained stable over the past 60 days, representing a 10% decrease from the year-ago quarter [1]. Group 2: Recent Performance - In the last reported quarter, AOS's earnings missed the Zacks Consensus Estimate by 4.5%, with a trailing four-quarter negative earnings surprise averaging 1.1% [2]. Group 3: Influencing Factors - Tepid demand for residential and commercial water heater products in North America is expected to negatively impact the segment's performance, with revenues projected to decrease 2.6% to $746 million [3]. - Ongoing challenges in the Chinese real estate market are likely to affect AOS's performance, with estimated revenues for the Rest of World segment at $216 million, down 4.8% year-over-year [4]. - High costs and expenses have negatively impacted AOS's performance, with labor shortages and increased material costs contributing to the challenges [5]. Group 4: Acquisitions Impact - Recent acquisitions, such as the Pureit business from Unilever in November 2024, are expected to positively impact AOS's top line by enhancing its water treatment solutions and brand recognition in India [6]. - The acquisition of Impact Water Products in March 2024 has expanded AOS's water treatment footprint in North America, contributing to its North America segment [7]. Group 5: Earnings Whispers - AOS has an Earnings ESP of -0.93%, with the Most Accurate Estimate at 89 cents per share, which is lower than the Zacks Consensus Estimate of 90 cents [9]. - Currently, AOS holds a Zacks Rank of 4 (Sell), indicating a less favorable outlook for an earnings beat this quarter [9].