A. O. Smith Corporation (NYSE:AOS) Just Released Its Third-Quarter Earnings: Here's What Analysts Think

A. O. Smith Corporation (NYSE:AOS) shareholders are probably feeling a little disappointed, since its shares fell 3.4% to US$66.70 in the week after its latest third-quarter results. A. O. Smith reported US$943m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.94 beat expectations, being 3.3% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the consensus forecast from A. O. Smith's 14 analysts is for revenues of US$3.99b in 2026. This reflects a credible 4.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 9.6% to US$4.18. Before this earnings report, the analysts had been forecasting revenues of US$4.06b and earnings per share (EPS) of US$4.25 in 2026. 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

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$78.18. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic A. O. Smith analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$62.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that A. O. Smith's revenue growth is expected to slow, with the forecast 3.4% annualised growth rate until the end of 2026 being well below the historical 4.9% 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 5.3% 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.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for A. O. Smith going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with A. O. Smith , and understanding it should be part of your investment process.

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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.