Published on 22 Apr 2024 on Zacks via Yahoo Finance

Is a Beat in Store for A. O. Smith (AOS) in Q1 Earnings?

A. O. Smith Corporation AOS is likely to witness top bottom-line growth when it reports first-quarter 2024 results on Apr 25, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $995 million, which suggests growth of 3% from the year-ago quarter’s reported figure.The consensus mark for earnings is pinned at 99 cents per share, which has improved 1% in the past 60 days. The figure indicates a jump of 5.3% from the figure reported in the year-ago quarter. The company’s bottom line surpassed the Zacks Consensus Estimate by a penny in the last reported quarter. It has a trailing four-quarter earnings surprise of 12%, on average.Let’s see how things have shaped up for A.O. Smith this earnings season.

Factors to Note

A. O. Smith’s North American segment is expected to have benefited from improving water heater volumes in North America and higher kitchen product sales in China in the first quarter. Also, strong demand for water heater products is likely to have driven the segment’s performance in the quarter. However, lower boiler sales are expected to have weighed on results. We expect revenues from the company’s North American segment to increase 2.4% year over year to $770.6 million in the to-be-reported quarter.The introduction of kitchen appliance products in China is likely to have boosted the performance of the Rest of the World segment. Our estimate for the segment’s revenues in the quarter is pegged at $226.9 million, indicating a year-over-year increase of 3.6%.Acquisitions made by A. O. Smith are likely to have impacted its top line positively in first-quarter 2024. In June 2022, the company acquired Atlantic Filter, which boosted its position in the water treatment industry and strengthened its customer base in Florida and the adjacent regions. Also, the acquisition of Canada-based Giant Factories, in October 2021, expanded the company’s commercial water heater offerings.The first-quarter results are also expected to reflect the benefits of improving supply chains and higher shipments. For the to-be-reported quarter, we expect the company’s revenues to be $989.6 million, indicating an increase of 2.4% year over year. Our estimate for the company’s earnings is pegged at 0.97 cents, indicating a 3% rise from the year-ago reported number.However, over time, A. O. Smith’s performance has been negatively impacted by high costs and expenses. An increase in raw material cost is likely to have been a spoilsport in the to-be-reported quarter. We expect the company’s selling, general and administrative expenses to escalate 8.9% year over year in the to-be-reported quarter.