With a market cap of $12.9 billion, A. O. Smith Corporation (AOS) specializes in water heating and water treatment solutions. The Milwaukee, Wisconsin-based company manufactures and markets energy-efficient residential and commercial water heaters, boilers, and filtration products, catering to various industries and consumers globally. It is expected to announce its Q3 earnings before the market opens on Tuesday, Oct. 22.

Ahead of the event, analysts expect the water heaters and boilers maker to report a profit of $0.94 per share, up 4.4% from $0.90 per share reported in the year-ago quarter. The company has surpassed Wall Street’s EPS estimates in three of the past four quarters while missing on one other occasion. In the most recent quarter, AOS missed the consensus estimates by a slight margin. 

In fiscal 2024, analysts expect AOS to report an EPS of $4.07, up 6.8% from $3.81 in fiscal 2023. Looking ahead to fiscal 2025, EPS is projected to grow 7.4% year-over-year to $4.37.

AOS stock is up 28.5% over the past 52 weeks, underperforming the S&P 500 Index’s ($SPX) 33.5% gains and the Industrial Select Sector SPDR Fund’s (XLI) 34.4% returns over the same time frame. 

Despite reporting better-than-expected Q2 revenue of $1 billion, shares of A. O. Smith tumbled 9.4% on Jul. 23 as adjusted earnings of $1.06 per share missed analysts' estimates. Additionally, margin pressures raised concerns, with gross margin declining to 38.7% from 40% in the previous year due to increased material costs and higher selling expenses. Flat sales in the Rest of the World segment, especially weaker demand for residential water treatment products in China, further dampened investor sentiment.

The consensus opinion on AOS stock is cautious, with a “Hold” rating overall. Among the 12 analysts covering the stock, three recommend a “Strong Buy,” seven suggest a “Hold” rating, and two suggest a “Strong Sell.” This configuration is slightly more bullish than three months ago, with two analysts suggesting a "Strong Buy."

The average target price for AOS stock is $87.62, indicating a potential upside of only 1.4% from current price levels. 

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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.