A. O. Smith Gears Up to Report Q4 Earnings: What to Expect?

A. O. Smith Corporation AOS is scheduled to release fourth-quarter 2025 results on Jan. 29, before market open.

The Zacks Consensus Estimate for A. O. Smith’s fourth-quarter earnings has remained steady in the past 60 days. The company beat estimates thrice and missed once in the trailing four quarters. The average surprise was 4.3%.

The Zacks Consensus Estimate for the company’s revenues is pegged at $923.7 million, indicating an increase of 1.2% from the prior-year quarter’s figure. However, the consensus estimate for adjusted earnings is pinned at 84 cents per share, indicating 1.2% decline from the year-ago quarter’s number. 

Let’s see how things have shaped up for A. O. Smith this earnings season.

Factors to Note Ahead of AOS’ Results

Strong demand for commercial water heaters and boilers is expected to support the North-America segment’s results in the fourth quarter. We expect revenues from the company’s North-America segment to increase 1.8% year over year to $702.4 million in the fourth quarter.

Acquisitions made by the company are likely to have impacted its top line positively. For instance, in November 2024, the company acquired the Pureit business from Unilever. The inclusion of Pureit’s expertise in water treatment solutions, coupled with its strong brand recognition, enabled AOS to expand its customer offerings and boost its position in the water treatment industry in India. 

Also, in March 2024, it acquired privately held water treatment company Impact Water Products, which expanded its water treatment footprint in North America. The acquired company is also likely to have boosted the performance of the North America segment.

However, the ongoing challenges in the Chinese real estate market have remained a concern for A. O. Smith. Lower volumes of residential water treatment and water heater products in the region are likely to have been a spoilsport for the Rest of the World segment’s top line. We expect the segment’s revenues to decrease 3% year over year to $229.6 million in the fourth quarter.

AOS has been witnessing escalating cost of sales and SG&A expenses, which are likely to weigh on its bottom-line results. We expect the SG&A expenses to increase 11.1% year over year to $202.2 million in the fourth quarter.

AOS has considerable exposure to overseas markets. Given the company’s substantial international operations, foreign currency headwinds are likely to have marred its profitability.

Earnings Whispers for AOS

Our proven model does not conclusively predict an earnings beat for AOS this time. 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 the Zacks Consensus Estimate are pegged at 84 cents per share. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: AOS presently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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.

Dover Corporation DOV has an Earnings ESP of +0.70% and a Zacks Rank of 3 at present. The company is slated to release fourth-quarter 2025 results on Jan. 29.

Dover’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%.

Kennametal Inc. KMT has an Earnings ESP of +8.57% and a Zacks Rank of 1 at present. The company is scheduled to release second-quarter fiscal 2026 results on Feb. 4.

KMT’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 26.9%.

Watts Water Technologies, Inc. WTS has an Earnings ESP of +0.59%    and a Zacks Rank of 2 at present. The company is slated to release fourth-quarter 2025 results on Feb. 11.

Watts Water’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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