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Investors in A. O. Smith Corporation (NYSE:AOS) had a good week, as its shares rose 3.2% to close at US$67.41 following the release of its quarterly results. The result was positive overall - although revenues of US$964m were in line with what the analysts predicted, A. O. Smith surprised by delivering a statutory profit of US$0.95 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on A. O. Smith after the latest results.
Taking into account the latest results, A. O. Smith's 15 analysts currently expect revenues in 2025 to be US$3.86b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 2.5% to US$3.77. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.83b and earnings per share (EPS) of US$3.75 in 2025. 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.
View our latest analysis for A. O. Smith
The analysts reconfirmed their price target of US$75.43, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values A. O. Smith at US$84.00 per share, while the most bearish prices it at US$59.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await A. O. Smith shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the A. O. Smith's past performance and to peers in the same industry. We would highlight that A. O. Smith's revenue growth is expected to slow, with the forecast 2.0% annualised growth rate until the end of 2025 being well below the historical 6.6% 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 5.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that A. O. Smith is also expected to grow slower than other industry participants.