We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Reasons to Hold A. O. Smith (AOS) Stock in Your Portfolio Now
Read MoreHide Full Article
A. O. Smith Corporation (AOS - Free Report) has been benefiting from strong demand for water heaters and commercial boilers in residential and commercial markets of North America. The company expects sales from both the North America boiler and water treatment businesses to grow approximately 8-10% this year. Also, healthy demand for combi boilers and kitchen appliance products in China has been boosting the performance of the Rest of the World business. For 2024, A. O. Smith expects overall sales to increase approximately 3-5% from the year-ago level.
A. O. Smith remains focused on acquiring businesses to gain access to new customers, regions and product lines. In March 2024, AOS acquired a California-based water treatment company, Impact Water Products. The buyout is expected to expand its water treatment business in the West Coast region. Also, in July 2024, it signed a definitive deal to acquire the Pureit business. The inclusion of Pureit’s expertise in water treatment solutions will enable A. O. Smith to expand its customer offerings in India.
Management is committed to rewarding shareholders through dividend payouts and share repurchases. In the first six months of 2024, it paid dividends worth $94.2 million and repurchased shares worth $153.2 million. In October 2023, it hiked its dividend by 7% to 32 cents per share.
Also, AOS’ sound liquidity position adds to its strength. Exiting the second quarter of 2024, it had cash and cash equivalents of $216.1 million, higher than the total debt of $130.5 million.
Image Source: Zacks Investment Research
Over the past year, the Zacks Rank #3 (Hold) company has gained 12.3% compared with the industry’s 9.7% growth.
However, the company has been witnessing weakened consumer confidence and a challenged real estate market in China, which may prove detrimental in the quarters ahead.
The escalating operating expenses pose a threat to A. O. Smith’s bottom line. In the second quarter, the cost of sales and selling, general and administrative expenses increased 9.1% and 4.5%, respectively, on a year-over-year basis. The rise was attributable to higher employee costs from increased wages and management incentives.
Emerson delivered a trailing four-quarter average earnings surprise of 6.3%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 0.2%.
Enersys delivered a trailing four-quarter average earnings surprise of 1.5%. In the past 60 days, the consensus estimate for 2024 earnings has increased 2.6%.
Zurn Elkay delivered a trailing four-quarter average earnings surprise of 8.7%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 2.5%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Reasons to Hold A. O. Smith (AOS) Stock in Your Portfolio Now
A. O. Smith Corporation (AOS - Free Report) has been benefiting from strong demand for water heaters and commercial boilers in residential and commercial markets of North America. The company expects sales from both the North America boiler and water treatment businesses to grow approximately 8-10% this year. Also, healthy demand for combi boilers and kitchen appliance products in China has been boosting the performance of the Rest of the World business. For 2024, A. O. Smith expects overall sales to increase approximately 3-5% from the year-ago level.
A. O. Smith remains focused on acquiring businesses to gain access to new customers, regions and product lines. In March 2024, AOS acquired a California-based water treatment company, Impact Water Products. The buyout is expected to expand its water treatment business in the West Coast region. Also, in July 2024, it signed a definitive deal to acquire the Pureit business. The inclusion of Pureit’s expertise in water treatment solutions will enable A. O. Smith to expand its customer offerings in India.
Management is committed to rewarding shareholders through dividend payouts and share repurchases. In the first six months of 2024, it paid dividends worth $94.2 million and repurchased shares worth $153.2 million. In October 2023, it hiked its dividend by 7% to 32 cents per share.
Also, AOS’ sound liquidity position adds to its strength. Exiting the second quarter of 2024, it had cash and cash equivalents of $216.1 million, higher than the total debt of $130.5 million.
Image Source: Zacks Investment Research
Over the past year, the Zacks Rank #3 (Hold) company has gained 12.3% compared with the industry’s 9.7% growth.
However, the company has been witnessing weakened consumer confidence and a challenged real estate market in China, which may prove detrimental in the quarters ahead.
The escalating operating expenses pose a threat to A. O. Smith’s bottom line. In the second quarter, the cost of sales and selling, general and administrative expenses increased 9.1% and 4.5%, respectively, on a year-over-year basis. The rise was attributable to higher employee costs from increased wages and management incentives.
Stocks to Consider
We have highlighted three better-ranked stocks, namely Emerson Electric Co. (EMR - Free Report) , Enersys (ENS - Free Report) and Zurn Elkay Water Solutions Corporation (ZWS - Free Report) , each carrying a Zacks Rank # 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Emerson delivered a trailing four-quarter average earnings surprise of 6.3%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 0.2%.
Enersys delivered a trailing four-quarter average earnings surprise of 1.5%. In the past 60 days, the consensus estimate for 2024 earnings has increased 2.6%.
Zurn Elkay delivered a trailing four-quarter average earnings surprise of 8.7%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 2.5%.