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A. O. Smith (AOS) Buys Atlantic Filter, Expands Presence

·3 min read

A. O. Smith Corporation AOS announced that it has completed the acquisition of Atlantic Filter Corporation. The financial terms of this all-cash transaction were kept under wraps.

Shares of A. O. Smith dipped 1.15% yesterday (Jun 8, 2022) to eventually close the trading session at $61.09.

Based in West Palm Beach, FL, Atlantic Filter Corporation is a family-owned business. It is a producer and supplier of water treatment products for the commercial, residential, industrial and institutional users. Atlantic Filter sells its products through retail dealership.

Acquisition Rationale

The Atlantic Filter buyout is anticipated to boost A. O. Smith’s position in the water treatment industry and strengthen its customer base in Florida and the adjacent regions. The addition of Atlantic Filter’s proficiency to the water treatment space will enhance A. O. Smith’s innovative portfolio of water heating and treatment products.

Atlantic Filter will be integrated into AOS’s water treatment business under the North America segment. Some other notable acquisitions made over time are Master Water Corporation (in 2021), Water-Right Group (in 2019), Hague Quality Water (in 2017) and Aquasana (in 2016).

Zacks Rank, Estimates and Price Performance

A. O. Smith, with a $9.3-billion market capitalization, currently carries a Zacks Rank #3 (Hold). AOS is poised to benefit from robust demand for products, supported by its strong retail and direct-to-consumer sales channel and pricing actions. Its healthy liquidity position and dedicated capital-deployment strategies add to its strength.

The Zacks Consensus Estimate for AOS’s earnings is pegged at $3.55 for 2022 and $3.85 for 2023, suggesting growth of 0.6% and 0.3% from the respective 60-day-ago figures.

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Shares of A. O. Smith have lost 7.7% compared with the 7.1% decline of the industry in the past three months.

Zacks Rank & Stocks to Consider

Some better-ranked companies from the industrial products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AIT’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have inched up 3.4% in the past three months.

Roper Technologies, Inc. ROP presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 2%, on average.

In the past 60 days, ROP’s earnings estimates have increased 1.2% for 2022. The stock has dipped 4.2% in the past three months.

IDEX Corporation IEX is presently Zacks #2 Ranked. IEX’s earnings surprise in the last four quarters was 2.8%, on average.

In the past 60 days, IEX’s earnings estimates have increased 3.2% for 2022. The stock has gained 3% in the past three months.


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