A. O. Smith (AOS) to Report Q2 Earnings: What's in Store?
A. O. Smith Corporation AOS is scheduled to report second-quarter results on Jul 27 before market open.
The Zacks Consensus Estimate for the company’s second-quarter earnings has been revised upward by 2.2% in the past 60 days. The company has a stellar earnings surprise history, having outperformed the consensus estimate in three of the trailing four quarters while matching in one, the average beat being 8%.
Let’s see how things are shaping up for A.O. Smith this earnings season.
Factors to Note
With improving supply chains, higher shipments are likely to have driven A. O. Smith’s second-quarter performance. Also, the decreasing cost of sales and selling, general and administrative expenses are likely to have driven the company’s bottom line. For the to-be-reported quarter, we expect adjusted earnings to increase 9.3% from the year-ago reported figure.
Robust demand for commercial and residential boilers and water treatment products is expected to have boosted the performance of the North America segment in the to-be-reported quarter.
Despite lower consumer demand in China due to coronavirus-related headwinds, strong demand for water heating and water treating products in India is likely to have driven the revenues of the Rest of the World segment. We expect the segment’s revenues to increase 4.6% from the second-quarter 2022 reported number.
A. O. Smith’s June 2022 acquisition of Atlantic Filter boosted its position in the water treatment industry and strengthened its customer base in Florida and the adjacent regions. This is likely to have improved its top line in the second quarter.
A. O. Smith Corporation Price and EPS Surprise
A. O. Smith Corporation price-eps-surprise | A. O. Smith Corporation Quote
However, given A. O. Smith’s significant presence in Asian countries like China and India, adverse foreign currency movements might have weighed on its top line. We expect the company’s revenues to remain nearly flat from second-quarter 2022 reported figure.
Earnings Whispers
Our proven model suggests an earnings beat for AOS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as elaborated below.
Earnings ESP: A. O. Smith has an Earnings ESP of + 5.87% as the Most Accurate Estimate is pegged at 98 cents, higher than the Zacks Consensus Estimate of 93 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: A. O. Smith carries a Zacks Rank of 2.
Highlights of Q1 Earnings
A. O. Smith’s first-quarter 2023 adjusted earnings (excluding 10 cents from non-recurring items) of 94 cents per share surpassed the Zacks Consensus Estimate of adjusted earnings of 77 cents per share. The bottom line jumped 22% year over year. Net sales of $966.4 million outperformed the consensus estimate of $925.5 million. The top line dipped 1.2% year over year.
Other Stocks to Consider
Here are some other companies within the broader Industrial Products sector, which according to our model, also have the right combination of elements to beat on earnings this reporting cycle.
Emerson Electric Co. EMR has an Earnings ESP of +2.35% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release third-quarter fiscal 2023 (ended Jun 30, 2023) results on Aug 2. Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters while missing in one, the average beat being 4.5%.
Allegion plc ALLE has an Earnings ESP of +3.94% and a Zacks Rank of 3. The company is scheduled to release second-quarter results on Jul 26.
ALLE’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 12.5%.
Ingersoll Rand Inc. IR has an Earnings ESP of +0.85% and a Zacks Rank of 3. The company is slated to release second-quarter 2023 results on Aug 2.
Ingersoll Rand’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 12.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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