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A. O. Smith (AOS) to Buy Pureit & Expand Presence in India

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A. O. Smith Corporation (AOS - Free Report) recently announced that it has signed a definitive deal with Unilever PLC (UL - Free Report) to acquire the latter’s Pureit unit for about $120 million in cash. The acquisition is expected to be completed by the end of this year, subject to the fulfillment of certain customary closing conditions.

AOS’ shares remained relatively stable yesterday and closed the trading session at $87.80.

Unilever’s brand Pureit provides a wide range of residential water purification solutions in India. Pureit is well-known for its advanced RO & UV water purifiers that offer safe and healthy drinking water to households. The business generated revenues of roughly $60 million in 2023.

Acquisition Rationale

The latest buyout is in sync with A. O. Smith’s policy of acquiring businesses to strengthen its business and product portfolio. The inclusion of Pureit’s expertise in water treatment solutions, coupled with its strong brand recognition, will enable AOS to expand its customer offerings and boost its position in the water treatment industry in India. Apart from enhancing A. O. Smith’s premium product portfolio, the buyout will also strengthen its distribution capabilities.

The buyout is not expected to have any material impact on AOS’ earnings in the first year.

Zacks Rank & Price Performance

A. O. Smith, with a $12.9 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is likely to benefit from the solid demand for its products, contribution from acquired assets and focus on operational execution. However, challenges in the Chinese real estate market remain a concern.

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The company’s shares have gained 8.3% in the past six months.

The Zacks Consensus Estimate for AOS’ 2024 earnings has been stable at $4.08 over the last 60 days. It has a trailing four-quarter average earnings surprise of 6.7%.

Stocks to Consider

A couple of better-ranked stocks from the industry are presented below.

Enersys (ENS - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ENS delivered a trailing four-quarter average earnings surprise of 2.7%. In the past 60 days, the Zacks Consensus Estimate for Enersys’ fiscal 2025 (ending March 2025) earnings has increased 3.9%.

Emerson Electric Co. (EMR - Free Report) presently carries a Zacks Rank #2 (Buy). EMR delivered a trailing four-quarter average earnings surprise of 10.7%. In the past 60 days, the consensus estimate for its 2024 earnings has risen 0.7%.


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Unilever PLC (UL) - free report >>

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