We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Retain A. O. Smith Stock in Portfolio Now
Read MoreHide Full Article
Key Takeaways
A. O. Smith saw India organic sales rise 12.9% in 2025.
AOS acquired Leonard Valve for $470M, expecting $70M sales in 2026.
China sales face pressure as Rest of World revenues fell 4% in 2025.
A. O. Smith Corporation (AOS - Free Report) has been benefiting from strong demand for commercial water heaters and boilers in North America. Also, organic sales from India have been particularly strong, jumping 12.9% year over year in 2025. A. O. Smith expects sales from its North America boiler business to grow approximately 6-8% this year, while volumes from the commercial water heater business are expected to increase in mid-single digits.
A. O. Smith remains focused on acquiring businesses to gain access to new customers, regions and product lines. For instance, in January 2026, the company completed the acquisition of LVC Holdco LLC (Leonard Valve) for $470 million. The buyout is likely to strengthen its water heating and boiler offerings and boost its presence in the water management market. It expects the addition of Leonard Valve to contribute approximately $70 million to its sales in 2026.
Management is committed to rewarding shareholders through dividend payouts and share repurchases. In 2025, it paid dividends worth $195.7 million and repurchased shares worth $400.8 million. In October 2025, it hiked its dividend by 6% to 36 cents per share. For 2026, it expects to repurchase shares worth approximately $200 million.
Also, AOS’ sound liquidity position adds to its strength. Exiting 2025, it had cash and cash equivalents of $174.5 million, higher than the current debt of $42.3 million.
AOS Stock’s Price Performance
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 2.8% compared with the industry’s 0.3% growth.
However, lower volumes of residential water treatment and water heater products in China remain challenging for the Rest of the World segment. The segment’s revenues declined 4% year over year in 2025. AOS issued a lackluster 2025 sales outlook for China. It currently expects the metric to decrease in mid-single digits on a year-over-year basis in local currency.
Also, rising operating expenses pose a threat to A. O. Smith’s bottom line. In 2025, AOS’ selling, general and administrative expenses increased 2.7% on a year-over-year basis. The metric, as a percentage of sales, increased 40 basis points. The rise was attributable to higher employee costs from increased wages and management incentives.
Key Picks
Some better-ranked stocks from the same space are discussed below.
Flowserve’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 17.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2026 earnings has increased 4.6%.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank #2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 1.4%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. Parker-Hannifin’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 6.8%. In the past 60 days, the Zacks Consensus Estimate for Parker-Hannifin’s fiscal 2026 earnings has increased 2.3%.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
Here's Why Investors Should Retain A. O. Smith Stock in Portfolio Now
Key Takeaways
A. O. Smith Corporation (AOS - Free Report) has been benefiting from strong demand for commercial water heaters and boilers in North America. Also, organic sales from India have been particularly strong, jumping 12.9% year over year in 2025. A. O. Smith expects sales from its North America boiler business to grow approximately 6-8% this year, while volumes from the commercial water heater business are expected to increase in mid-single digits.
A. O. Smith remains focused on acquiring businesses to gain access to new customers, regions and product lines. For instance, in January 2026, the company completed the acquisition of LVC Holdco LLC (Leonard Valve) for $470 million. The buyout is likely to strengthen its water heating and boiler offerings and boost its presence in the water management market. It expects the addition of Leonard Valve to contribute approximately $70 million to its sales in 2026.
Management is committed to rewarding shareholders through dividend payouts and share repurchases. In 2025, it paid dividends worth $195.7 million and repurchased shares worth $400.8 million. In October 2025, it hiked its dividend by 6% to 36 cents per share. For 2026, it expects to repurchase shares worth approximately $200 million.
Also, AOS’ sound liquidity position adds to its strength. Exiting 2025, it had cash and cash equivalents of $174.5 million, higher than the current debt of $42.3 million.
AOS Stock’s Price Performance
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 2.8% compared with the industry’s 0.3% growth.
However, lower volumes of residential water treatment and water heater products in China remain challenging for the Rest of the World segment. The segment’s revenues declined 4% year over year in 2025. AOS issued a lackluster 2025 sales outlook for China. It currently expects the metric to decrease in mid-single digits on a year-over-year basis in local currency.
Also, rising operating expenses pose a threat to A. O. Smith’s bottom line. In 2025, AOS’ selling, general and administrative expenses increased 2.7% on a year-over-year basis. The metric, as a percentage of sales, increased 40 basis points. The rise was attributable to higher employee costs from increased wages and management incentives.
Key Picks
Some better-ranked stocks from the same space are discussed below.
Flowserve Corporation (FLS - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Flowserve’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 17.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2026 earnings has increased 4.6%.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank #2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 1.4%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. Parker-Hannifin’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 6.8%. In the past 60 days, the Zacks Consensus Estimate for Parker-Hannifin’s fiscal 2026 earnings has increased 2.3%.