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A. O. Smith (AOS) to Report Q2 Earnings: What's in the Cards?
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A. O. Smith Corporation (AOS - Free Report) is scheduled to report second-quarter 2020 results on Jul 30, before market open.
The company delivered a negative earnings surprise of 4.77%, on average, in the trailing four quarters, missing estimates on all occasions. In the last reported quarter, A. O. Smith posted earnings of 32 cents, which missed the Zacks Consensus Estimate of 34 cents by 5.88%.
In the past three months, the company’s shares have gained 19.9% compared with the industry’s growth of 17.4%.
Factors to Consider
A. O. Smith is expected to have gained from its strong position in the replacement market. Healthy demand for water heating and water treatment products in the United States is expected to have supported the company’s top line in the second quarter. Also, some of its actions, including supply-chain initiatives, reduction of discretionary expenses, eliminating unnecessary investments and reprioritization of capital expenditure, are expected to have helped it maintain a healthy margin performance.
Moreover, the company’s Water-Right buyout (completed in April 2019), which enhanced growth opportunities in the water treatment industry especially in the wholesale and independent dealer array, is likely to have augmented second-quarter revenues. In addition, an improvement in the effectiveness of its direct-to-consumer channel is anticipated to get reflected in the to-be-reported quarter results.
However, the impacts of the pandemic on the demand for the company’s products are expected to be reflected in the second-quarter results. Notably, persistent soft end-market demand in China is expected to get reflected on A. O. Smith’s top-line results. Also, low order rates for residential water heaters in North America are anticipated to have adversely impacted its performance in the to-be-reported quarter. In addition, weak end markets in India amid the coronavirus outbreak might have hurt its top-line performance.
In addition, given its diverse geographic presence, its operations have been subject to issues like unfavorable movement in foreign currencies, interest rate fluctuations and hyperinflation in some foreign countries. This is also expected to have hurt its business, particularly in China, in the second quarter.
Amid this backdrop, the Zacks Consensus Estimate for revenues from A. O. Smith's North America segment is currently pegged at $459 million, indicating a 12.4% fall from the year-ago quarter’s reported number. The consensus estimate for revenues from Rest of the World stands at $199 million, suggesting a decline of 20.1% year over year.
Earnings Whispers
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here as we will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: A. O. Smith has an Earnings ESP of -8.57% as the Most Accurate Estimate is pegged at 40 cents, lower than the Zacks Consensus Estimate of 44 cents.
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Greif, Inc. (GEF - Free Report) currently has a Zacks Rank #3 and an Earnings ESP of +3.41%.
Eaton Corporation, plc (ETN - Free Report) presently has a Zacks Rank #3 and an Earnings ESP of +5.80%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
A. O. Smith (AOS) to Report Q2 Earnings: What's in the Cards?
A. O. Smith Corporation (AOS - Free Report) is scheduled to report second-quarter 2020 results on Jul 30, before market open.
The company delivered a negative earnings surprise of 4.77%, on average, in the trailing four quarters, missing estimates on all occasions. In the last reported quarter, A. O. Smith posted earnings of 32 cents, which missed the Zacks Consensus Estimate of 34 cents by 5.88%.
In the past three months, the company’s shares have gained 19.9% compared with the industry’s growth of 17.4%.
Factors to Consider
A. O. Smith is expected to have gained from its strong position in the replacement market. Healthy demand for water heating and water treatment products in the United States is expected to have supported the company’s top line in the second quarter. Also, some of its actions, including supply-chain initiatives, reduction of discretionary expenses, eliminating unnecessary investments and reprioritization of capital expenditure, are expected to have helped it maintain a healthy margin performance.
Moreover, the company’s Water-Right buyout (completed in April 2019), which enhanced growth opportunities in the water treatment industry especially in the wholesale and independent dealer array, is likely to have augmented second-quarter revenues. In addition, an improvement in the effectiveness of its direct-to-consumer channel is anticipated to get reflected in the to-be-reported quarter results.
However, the impacts of the pandemic on the demand for the company’s products are expected to be reflected in the second-quarter results. Notably, persistent soft end-market demand in China is expected to get reflected on A. O. Smith’s top-line results. Also, low order rates for residential water heaters in North America are anticipated to have adversely impacted its performance in the to-be-reported quarter. In addition, weak end markets in India amid the coronavirus outbreak might have hurt its top-line performance.
In addition, given its diverse geographic presence, its operations have been subject to issues like unfavorable movement in foreign currencies, interest rate fluctuations and hyperinflation in some foreign countries. This is also expected to have hurt its business, particularly in China, in the second quarter.
Amid this backdrop, the Zacks Consensus Estimate for revenues from A. O. Smith's North America segment is currently pegged at $459 million, indicating a 12.4% fall from the year-ago quarter’s reported number. The consensus estimate for revenues from Rest of the World stands at $199 million, suggesting a decline of 20.1% year over year.
Earnings Whispers
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here as we will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: A. O. Smith has an Earnings ESP of -8.57% as the Most Accurate Estimate is pegged at 40 cents, lower than the Zacks Consensus Estimate of 44 cents.
A. O. Smith Corporation Price and EPS Surprise
A. O. Smith Corporation price-eps-surprise | A. O. Smith Corporation Quote
Zacks Rank: A. O. Smith carries a Zacks Rank #2.
Stocks to Consider
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
AptarGroup, Inc. (ATR - Free Report) has an Earnings ESP of +12.47% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif, Inc. (GEF - Free Report) currently has a Zacks Rank #3 and an Earnings ESP of +3.41%.
Eaton Corporation, plc (ETN - Free Report) presently has a Zacks Rank #3 and an Earnings ESP of +5.80%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>