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Valued at a market cap of $9.5 billion, A. O. Smith Corporation (AOS) is a leading American manufacturer specializing in residential and commercial water heating and treatment solutions. Founded in 1874, the Milwaukee, Wisconsin-based company has evolved from producing bicycle parts to becoming a global water technology leader.
Shares of AOS have lagged the broader market over the past 52 weeks. AOS has declined 20.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 10.2%. Moreover, shares of AOS are down 1.7% on a YTD basis, compared to $SPX’s 1.3% fall.
On a closer look, AOS has also trailed the Industrial Select Sector SPDR Fund’s (XLI) 13.7% return over the past 52 weeks and a 6.9% YTD gain.
On Apr. 29, AOS released its first-quarter results, and its shares popped 3.5%. It reported revenue of $963.9 million, surpassing the Street’s estimates but reflecting a 1.5% decrease from the same period in 2024, primarily due to lower water heater volumes in North America and decreased sales in China. The company's adjusted EPS stood at $0.95, surpassing the expectations of $0.90.
As of March 31, 2025, cash and marketable securities balances totaled $200.2 million and debt totaled $269.8 million. The company also repurchased 1.8 million shares for $120.6 million during the quarter.
For the current fiscal year, ending in December 2025, analysts expect AOS’ EPS to grow marginally year-over-year to $3.75. The company's earnings surprise history is mixed. It topped or met the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 11 analysts covering the stock, the consensus rating is a “Hold.” That’s based on three “Strong Buy” ratings, seven “Holds,” and one “Strong Sell.”
On May 12, Stifel reaffirmed a “Buy” rating with a $78 price target for A. O. Smith, citing its strong position in the heating and cooling market.
The mean price target of $73.78 suggests a premium of 10.1% from the current market prices. The Street-high price target of $82 implies a potential upside of 22.4% from the current price levels.
