Earnings Update: A. O. Smith Corporation (NYSE:AOS) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

A. O. Smith Corporation (NYSE:AOS) shareholders are probably feeling a little disappointed, since its shares fell 7.7% to US$82.18 in the week after its latest second-quarter results. Results overall were respectable, with statutory earnings of US$1.06 per share roughly in line with what the analysts had forecast. Revenues of US$1.0b came in 2.5% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for A. O. Smith

Following last week's earnings report, A. O. Smith's 14 analysts are forecasting 2024 revenues to be US$3.99b, approximately in line with the last 12 months. Per-share earnings are expected to rise 2.9% to US$4.07. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.99b and earnings per share (EPS) of US$4.10 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$88.23, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic A. O. Smith analyst has a price target of US$98.00 per share, while the most pessimistic values it at US$73.00. This is a very narrow spread of estimates, implying either that A. O. Smith is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that A. O. Smith's revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2024 being well below the historical 7.1% 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. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than A. O. Smith.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$88.23, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple A. O. Smith analysts - going out to 2026, and you can see them free on our platform here.

You can also see our analysis of A. O. Smith's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com