Yahoo Finance A. O. Smith Corporation (NYSE:AOS) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?
A. O. Smith Corporation (NYSE:AOS) shareholders are probably feeling a little disappointed, since its shares fell 3.0% to US$84.31 in the week after its latest first-quarter results. It was a credible result overall, with revenues of US$979m and statutory earnings per share of US$1.00 both in line with analyst estimates, showing that A. O. Smith is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for A. O. Smith
After the latest results, the 14 analysts covering A. O. Smith are now predicting revenues of US$3.99b in 2024. If met, this would reflect a modest 3.3% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 3.9% to US$4.09. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.01b and earnings per share (EPS) of US$4.09 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$87.43. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on A. O. Smith, with the most bullish analyst valuing it at US$95.00 and the most bearish at US$73.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that A. O. Smith's revenue growth is expected to slow, with the forecast 4.5% annualised growth rate until the end of 2024 being well below the historical 6.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than A. O. Smith.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that A. O. Smith's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on A. O. Smith. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for A. O. Smith going out to 2026, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
