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Here's Why You Should Consider Investing in A. O. Smith (AOS)
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A. O. Smith Corporation (AOS - Free Report) is gaining from strength in its North America and Rest of the World segments, and accretive acquisitions. The company’s commitment to reward its shareholders also bodes well.
Let’s delve into the factors, which make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
Business Strength: Robust demand for commercial and residential water heaters is aiding the company’s North America segment. A. O. Smith expects North America water treatment sales to increase 5-7% for 2023. Strong demand for residential and commercial water treatment products in China and higher sales in India are boosting revenues in the Rest of the World segment. The company expects China sales to increase 3-5% in 2023, while India sales are anticipated to increase 15%.
Expansion Initiatives: The company solidified its product portfolio and leveraged business opportunities by adding assets. In June 2022, the company acquired Atlantic Filter, boosting its position in the water treatment industry and strengthening its customer base in Florida and the adjacent regions.
Rewards to Shareholders: A. O. Smith continues to increase shareholders’ value through dividend payments and share buybacks. In the first six months of 2023, the company paid dividends of $90.6 million, up 3.1% year over year. In the same period, AOS repurchased 1.08 million shares for approximately $70 million. For 2023, the company expects to repurchase shares worth approximately $300 million. In October 2022, A. O Smith hiked its dividend by 7% to 30 cents per share (annually: $1.20). The company has raised its annual dividend for 30 consecutive years.
Northward Estimate Revision: The Zacks Consensus Estimate for AOS’ 2023 earnings has been revised upward by 0.3% in the past 60 days.
Price Performance: Shares of A. O. Smith have gained 37% in the past year, outperforming the industry’s 23.2% increase.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
The company delivered a trailing four-quarter earnings surprise of approximately 243.1%, on average. In the past 60 days, estimates for Graham’s earnings have increased 66.7% for 2023. The stock has soared 114% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 15%, on average.
AIT’s earnings estimates have increased 1.6% for fiscal 2024 (ending June 2024) in the past 60 days. Shares of Applied Industrial have risen 42.8% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 18.5%, on average.
In the past 60 days, estimates for Caterpillar’s earnings have increased 2.2% for 2023. The stock has gained 48.9% in the past year.
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Here's Why You Should Consider Investing in A. O. Smith (AOS)
A. O. Smith Corporation (AOS - Free Report) is gaining from strength in its North America and Rest of the World segments, and accretive acquisitions. The company’s commitment to reward its shareholders also bodes well.
Let’s delve into the factors, which make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
Business Strength: Robust demand for commercial and residential water heaters is aiding the company’s North America segment. A. O. Smith expects North America water treatment sales to increase 5-7% for 2023. Strong demand for residential and commercial water treatment products in China and higher sales in India are boosting revenues in the Rest of the World segment. The company expects China sales to increase 3-5% in 2023, while India sales are anticipated to increase 15%.
Expansion Initiatives: The company solidified its product portfolio and leveraged business opportunities by adding assets. In June 2022, the company acquired Atlantic Filter, boosting its position in the water treatment industry and strengthening its customer base in Florida and the adjacent regions.
Rewards to Shareholders: A. O. Smith continues to increase shareholders’ value through dividend payments and share buybacks. In the first six months of 2023, the company paid dividends of $90.6 million, up 3.1% year over year. In the same period, AOS repurchased 1.08 million shares for approximately $70 million. For 2023, the company expects to repurchase shares worth approximately $300 million. In October 2022, A. O Smith hiked its dividend by 7% to 30 cents per share (annually: $1.20). The company has raised its annual dividend for 30 consecutive years.
Northward Estimate Revision: The Zacks Consensus Estimate for AOS’ 2023 earnings has been revised upward by 0.3% in the past 60 days.
Price Performance: Shares of A. O. Smith have gained 37% in the past year, outperforming the industry’s 23.2% increase.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
Graham Corporation (GHM - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company delivered a trailing four-quarter earnings surprise of approximately 243.1%, on average. In the past 60 days, estimates for Graham’s earnings have increased 66.7% for 2023. The stock has soared 114% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 15%, on average.
AIT’s earnings estimates have increased 1.6% for fiscal 2024 (ending June 2024) in the past 60 days. Shares of Applied Industrial have risen 42.8% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 18.5%, on average.
In the past 60 days, estimates for Caterpillar’s earnings have increased 2.2% for 2023. The stock has gained 48.9% in the past year.