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Here's Why It is Worth Investing in A. O. Smith (AOS) Stock

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A. O. Smith Corporation (AOS - Free Report) is well-poised for growth, courtesy of strength across its segments, acquisitions and a sound capital deployment strategy.

The current Zacks Rank #2 (Buy) player has a market capitalization of $9.9 billion. In the past six months, the stock has gained 16.6% compared with the industry’s 11.5% rise.

Let’s delve into the factors that make AOS a smart investment choice at the moment.

Business Strength: A. O. Smith’s North America Segment is gaining from the demand for commercial and residential boilers, and water treatment products. Price increases are also aiding the segment. Strong demand for water heating and water treating products is supporting sales from India within the Rest of the World segment.


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Acquisition Benefits: AOS intends to strengthen and expand its businesses through acquisitions. Its Atlantic Filter acquisition in June 2022 boosted its position in the water treatment industry and strengthened its customer base in Florida and the adjacent regions. The Canada-based Giant Factories, Inc. buyout in October 2021 expanded the company’s commercial and water heater offerings. In fourth-quarter 2022, the Giant Factories acquisition added $94 million to the company’s North American sales.

Rewards to Shareholders: The company’s measures to reward its shareholders through dividend payments and share buybacks are noteworthy. In 2022, A. O. Smith paid out dividends worth $177.2 million (up 4.2% year over year) and repurchased 6.6 million shares for $403.5 million (up 10.1% year over year). In October 2022, the company hiked its quarterly dividend rate by 7% to 30 cents per share.

Northbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 (ending June 2023) earnings has been revised 4.1% upward.

Other Stocks to Consider

Some other top-ranked companies from the Industrial Products sector are discussed below:

Deere & Company (DE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). DE’s earnings surprise in the last four quarters was 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

In the past 60 days, Deere & Company’s earnings estimates have increased 6.4% for fiscal 2023. The stock has rallied 15.7% in the past six months.

Ingersoll Rand Inc. (IR - Free Report) presently carries a Zacks Rank of 2. IR’s earnings surprise in the last four quarters was 8.5%, on average.

In the past 60 days, Ingersoll Rand’s earnings estimates have increased 3.4% for 2023. The stock has gained 21.6% in the past six months.

Parker-Hannifin Corporation (PH - Free Report) presently has a Zacks Rank of 2. PH’s earnings surprise in the last four quarters was 9.1%, on average.

In the past 60 days, Parker-Hannifin’s earnings estimates have increased 1.3% for fiscal 2023. The stock has rallied 32.9% in the past six months.

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