Why Is A. O. Smith (AOS) Stock Rocketing Higher Today

What Happened?

Shares of water heating and treatment solutions company A.O. Smith (NYSE:AOS) jumped 5.9% in the afternoon session after its fourth-quarter 2025 earnings surpassed Wall Street's expectations, signaling strong profitability to investors. 

The company's performance appeared to outweigh a slight miss on revenue and a full-year 2026 forecast that came in just below consensus estimates. For the fourth quarter, A. O. Smith reported a GAAP profit of $0.90 per share, beating analyst estimates by 6.4%. However, quarterly revenue was flat year-over-year at $912.5 million, narrowly missing expectations. The company also posted a significant beat on Adjusted EBITDA, a measure of core operational profitability. Looking ahead, A. O. Smith projected its full-year 2026 earnings to be around $4.00 per share at the midpoint of its guidance, slightly below the analyst consensus. Similarly, its revenue guidance of $3.96 billion at the midpoint also fell short of expectations. The positive stock reaction suggests investors focused on the current bottom-line strength rather than the softer top-line results and outlook.

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What Is The Market Telling Us

A. O. Smith’s shares are not very volatile and have only had 1 move greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock gained 5.5% on the news that the company reported second-quarter earnings that surpassed analyst expectations and raised its full-year guidance. The water heater manufacturer posted earnings per share (EPS) of $1.07, which was above the consensus estimate of $0.99. While revenue of $1.01 billion marked a slight 1% year-over-year decline, it also came in ahead of forecasts. The positive performance was driven by what the company's CEO described as 'continued steady growth in commercial boilers and another sequential quarter of North America water heater volume growth.' As a result of the strong quarter, A. O. Smith lifted its full-year sales growth outlook to between 1% and 3% and increased its EPS guidance. However, the company did note it faced challenges in its China business and initiated an assessment of strategic opportunities for that unit.

A. O. Smith is up 8% since the beginning of the year, and at $73.82 per share, it is trading close to its 52-week high of $74.30 from September 2025. Investors who bought $1,000 worth of A. O. Smith’s shares 5 years ago would now be looking at an investment worth $1,359.

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