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Here's Why You Should Give A. O. Smith (AOS) a Shot Now
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A. O. Smith Corporation (AOS - Free Report) is benefiting from strong demand for its boilers and water treatment products across North America. The company’s measures to expand its operations through acquisitions are fostering its growth. AOS’ commitment to reward shareholders through dividends and buybacks are an added positive.
Let’s delve deeper to unearth the factors that might make investing in this Zacks Rank #2 (Buy) company a smart choice now.
Business Strength: Strength in A. O. Smith’s North America segment (accounts for the bulk of the top line) on account of robust demand for boilers and water treatment products, supported by its strong retail and direct-to-consumer sales channel and pricing actions, should drive the company’s top line. For 2022, the company anticipates year-over-year sales growth of 13-14% from its water treatment business in North America. Also, sales from the boiler business in North America are projected to grow 18-20% year over year. Strong demand across all major product categories in China, focus on investments in product developments, production efficiency and strong price management capabilities bode well for AOS’ prospects. For 2022, the company expects total revenues to increase 14-16% year over year. It estimates adjusted earnings per share in the range of $3.35-$3.55 for the current year. The guided range is higher than $2.96 reported in 2021.
Expansion Initiatives: Last month, A. O. Smith closed the acquisition of Atlantic Filter Corporation, a producer and supplier of water treatment products for commercial, residential, industrial and institutional users. The buyout is expected to boost AOS’ position in the water treatment industry and strengthen its customer base in Florida and the adjacent regions. Last year, the company acquired Canada-based Giant Factories, expanding its commercial and water heater offerings. It also acquired Master Water Conditioning Corporation, boosting its water treatment business in North America. The acquisitions are expected to foster its top-line growth.
Rewards to Shareholders: In the first three months of 2022, A.O. Smith repurchased shares worth $107.9 million, up 61% year over year. In the same period, the company paid dividends worth $44.2 million, up 4.7% year over year. For 2022, AOS expects to repurchase $400 million worth of shares. In October 2021, the company had hiked its dividend by 8%.
Northbound Estimate Revision: The Zacks Consensus Estimate for A.O. Smith’s current-year earnings has been revised upward by nearly 1% in the past 60 days.
Other Stocks to Consider
Some other stocks worth considering within the broader Zacks Industrial Products sector are as follows:
Greif Inc. (GEF - Free Report) sports a Zacks Rank #1 (Strong Buy). GEF has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 3% in the past three months.
Titan International flaunts a Zacks Rank #1. TWI has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for TWI’s current-year earnings has been revised upward by 43.3%.
Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have gained 5.5% in the past three months.
RBC Bearings carries a Zacks Rank #2. ROLL has an estimated earnings growth rate of 49.9% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7%.
RBC Bearings pulled off a trailing four-quarter earnings surprise of 3.4%, on average. The company’s shares have gained 3.1% in the past three months.
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Here's Why You Should Give A. O. Smith (AOS) a Shot Now
A. O. Smith Corporation (AOS - Free Report) is benefiting from strong demand for its boilers and water treatment products across North America. The company’s measures to expand its operations through acquisitions are fostering its growth. AOS’ commitment to reward shareholders through dividends and buybacks are an added positive.
Let’s delve deeper to unearth the factors that might make investing in this Zacks Rank #2 (Buy) company a smart choice now.
Business Strength: Strength in A. O. Smith’s North America segment (accounts for the bulk of the top line) on account of robust demand for boilers and water treatment products, supported by its strong retail and direct-to-consumer sales channel and pricing actions, should drive the company’s top line. For 2022, the company anticipates year-over-year sales growth of 13-14% from its water treatment business in North America. Also, sales from the boiler business in North America are projected to grow 18-20% year over year. Strong demand across all major product categories in China, focus on investments in product developments, production efficiency and strong price management capabilities bode well for AOS’ prospects. For 2022, the company expects total revenues to increase 14-16% year over year. It estimates adjusted earnings per share in the range of $3.35-$3.55 for the current year. The guided range is higher than $2.96 reported in 2021.
A. O. Smith Corporation Price and Consensus
A. O. Smith Corporation price-consensus-chart | A. O. Smith Corporation Quote
Expansion Initiatives: Last month, A. O. Smith closed the acquisition of Atlantic Filter Corporation, a producer and supplier of water treatment products for commercial, residential, industrial and institutional users. The buyout is expected to boost AOS’ position in the water treatment industry and strengthen its customer base in Florida and the adjacent regions. Last year, the company acquired Canada-based Giant Factories, expanding its commercial and water heater offerings. It also acquired Master Water Conditioning Corporation, boosting its water treatment business in North America. The acquisitions are expected to foster its top-line growth.
Rewards to Shareholders: In the first three months of 2022, A.O. Smith repurchased shares worth $107.9 million, up 61% year over year. In the same period, the company paid dividends worth $44.2 million, up 4.7% year over year. For 2022, AOS expects to repurchase $400 million worth of shares. In October 2021, the company had hiked its dividend by 8%.
Northbound Estimate Revision: The Zacks Consensus Estimate for A.O. Smith’s current-year earnings has been revised upward by nearly 1% in the past 60 days.
Other Stocks to Consider
Some other stocks worth considering within the broader Zacks Industrial Products sector are as follows:
Greif Inc. (GEF - Free Report) sports a Zacks Rank #1 (Strong Buy). GEF has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 3% in the past three months.
Titan International flaunts a Zacks Rank #1. TWI has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for TWI’s current-year earnings has been revised upward by 43.3%.
Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have gained 5.5% in the past three months.
RBC Bearings carries a Zacks Rank #2. ROLL has an estimated earnings growth rate of 49.9% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7%.
RBC Bearings pulled off a trailing four-quarter earnings surprise of 3.4%, on average. The company’s shares have gained 3.1% in the past three months.