A. O. Smith Gears Up to Report Q1 Earnings: What to Expect?

A. O. Smith Corporation AOS is set to release first-quarter 2025 results on April 29, before the opening bell. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The Zacks Consensus Estimate for revenues is pegged at $947.3 million, which indicates a decline of 3.2% from the year-ago quarter’s figure. The consensus mark for earnings is pinned at 90 cents per share, which has been stable in the past 60 days. The estimate indicates a decrease of 10% from the figure reported in the year-ago quarter.

The company’s earnings missed the Zacks Consensus Estimate by 4.5% in the last reported quarter. It has a trailing four-quarter negative earnings surprise of 1.1%, on average, as it beat estimates once, missed twice and matched the same once.

Factors Likely to Influence AOS’ Q1 Results

Tepid demand for residential and commercial water heater products in North America is expected to have hurt the segment’s performance. However, higher orders for boiler and water treatment products are likely to augment its results. We expect the segment’s revenues to decrease 2.6% from the year-ago quarter to $746 million.

The ongoing challenges in the Chinese real estate market have remained a concern for A. O. Smith. Lower volumes of water heaters and water treatment products in the region are likely to have been a spoilsport for the Rest of World segment’s top line. Our estimate for the segment’s revenues is pegged at $216 million, suggesting a decline of 4.8% from the year-ago quarter.

Over time, A. O. Smith’s performance has been negatively impacted by high costs and expenses. Although supply-chain constraints moderated, labor shortage and an increase in material costs are likely to have played spoilsport.

However, 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 the privately held water treatment company Impact Water Products, which expanded its water treatment footprint in North America. Impact Water Products is included in the North America segment.

A. O. Smith Corporation Price and EPS Surprise

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

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for AOS this time around. 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. That is not the case here, as elaborated below.

Earnings ESP: AOS has an Earnings ESP of -0.93% as the Most Accurate Estimate is pegged at 89 cents per share, lower than the Zacks Consensus Estimate of 90 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: A. O. Smith currently carries a Zacks Rank #4 (Sell).

Stocks With the Favorable Combination

Here are three companies, which according to our model, have the right combination of elements to post an earnings beat this season.

Emerson Electric Co. EMR has an Earnings ESP of +1.96% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is scheduled to release first-quarter 2025 results on May 7. EMR’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 4.3%.

Illinois Tool Works ITW has an Earnings ESP of +1.52% and a Zacks Rank of 3 at present. The company is slated to release first-quarter results on April 30.

ITW’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.6%.

Parker-Hannifin Corporation PH has an Earnings ESP of +1.01% and a Zacks Rank of 3 at present. The company is slated to release its third-quarter fiscal 2025 results on May 1.

PH delivered an average earnings surprise of 5.4% in the last four quarters, while beating estimates in each of the quarters.

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

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