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A. O. Smith Misses Earnings & Sales Estimates in Q1, Lowers 26' View
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Key Takeaways
A. O. Smith Q1 EPS fell 11% and missed estimates and sales declined 2% year over year.
AOS faced sharp weakness in China, with organic sales down 17% in local currency.
Company lowered 2026 EPS outlook and trimmed sales guidance amid ongoing market pressure.
A. O. Smith Corporation’s (AOS - Free Report) first-quarter 2026 adjusted earnings of 85 cents per share missed the Zacks Consensus Estimate of 94 cents. The bottom line decreased 11% on a year-over-year basis.
Net sales of $945.6 million missed the consensus estimate of $969 million. The top line declined 2% year over year, owing to weakness in the consumer appliance market in China.
Segmental Details
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) increased 1% year over year to $753.4 million. Our estimate for segmental revenues was $760.9 million. This uptick was caused by benefits from effective pricing and the positive contribution of the Leonard Valve buyout.
Segmental earnings were $175.4 million, down 5.3% year over year.
Quarterly sales in the Rest of the World (including China, India and Europe) segment were $200.7 million, down 11% year over year. Organic sales in China fell 17% in local currency.
The segment’s earnings were $12.4 million, down 37.1% year over year due to weaker sales volumes, which were partially offset by cost reduction actions.
A. O. Smith Corporation Price, Consensus and EPS Surprise
A.O. Smith’s cost of sales was $579.9 million, down 1.5% year over year. Selling, general & administrative expenses were $203.9 million, up 5.9%.
Gross profit decreased 2.6% year over year to $365.7 million. The gross margin was 38.7% compared with 38.9% in the year-ago period. Interest expenses were $7.1 million compared with $2.9 million in the year-ago quarter.
A.O. Smith’s Liquidity & Cash Flow
As of March 31, 2026, AOS’ cash and cash equivalents totaled $185.2 million compared with $174.5 million at the end of December 2025.
At the end of the first quarter, long-term debt was $574.2 million compared with $112.7 million at the end of December 2025. The increase in debt level was attributable to cash borrowed by the company under a new term loan for the acquisition of Leonard Valve.
In the first three months of 2026, cash provided by operating activities totaled $129.4 million compared with $38.7 million in the year-ago period.
AOS’ Share Repurchases
In the first three months of 2026, A.O. Smith repurchased 0.7 million shares for $51.3 million. As of first quarter-end, approximately 5.1 million shares were left to be repurchased under the share repurchase authorization.
In January 2026, AOS’ board boosted the buyback program by another 5 million shares. For 2026, it expects to repurchase shares worth approximately $200 million.
A.O. Smith’s 2025 Outlook
A.O. Smith has provided the sales outlook for 2026. The company expects net sales to be in the range of $3.90-$4.00 billion compared with $3.90-$4.02 billion predicted earlier.
Management currently projects adjusted earnings per share to be in the band of $3.70-$4.00, lower than $3.85-$4.15 projected previously.
AOS’ Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the same space are discussed below:
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased by 17.2%.
Kennametal (KMT - Free Report) presently sports a Zacks Rank of 1. Kennametal’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 35.4%. In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 earnings has increased 9%.
Powell Industries (POWL - Free Report) currently carries a Zacks Rank of 2. Powell’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 12.9%. In the past 60 days, the Zacks Consensus Estimate for Powell’s fiscal 2026 earnings has increased 3%.
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A. O. Smith Misses Earnings & Sales Estimates in Q1, Lowers 26' View
Key Takeaways
A. O. Smith Corporation’s (AOS - Free Report) first-quarter 2026 adjusted earnings of 85 cents per share missed the Zacks Consensus Estimate of 94 cents. The bottom line decreased 11% on a year-over-year basis.
Net sales of $945.6 million missed the consensus estimate of $969 million. The top line declined 2% year over year, owing to weakness in the consumer appliance market in China.
Segmental Details
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) increased 1% year over year to $753.4 million. Our estimate for segmental revenues was $760.9 million. This uptick was caused by benefits from effective pricing and the positive contribution of the Leonard Valve buyout.
Segmental earnings were $175.4 million, down 5.3% year over year.
Quarterly sales in the Rest of the World (including China, India and Europe) segment were $200.7 million, down 11% year over year. Organic sales in China fell 17% in local currency.
The segment’s earnings were $12.4 million, down 37.1% year over year due to weaker sales volumes, which were partially offset by cost reduction actions.
A. O. Smith Corporation Price, Consensus and EPS Surprise
A. O. Smith Corporation price-consensus-eps-surprise-chart | A. O. Smith Corporation Quote
AOS’ Margin Details
A.O. Smith’s cost of sales was $579.9 million, down 1.5% year over year. Selling, general & administrative expenses were $203.9 million, up 5.9%.
Gross profit decreased 2.6% year over year to $365.7 million. The gross margin was 38.7% compared with 38.9% in the year-ago period. Interest expenses were $7.1 million compared with $2.9 million in the year-ago quarter.
A.O. Smith’s Liquidity & Cash Flow
As of March 31, 2026, AOS’ cash and cash equivalents totaled $185.2 million compared with $174.5 million at the end of December 2025.
At the end of the first quarter, long-term debt was $574.2 million compared with $112.7 million at the end of December 2025. The increase in debt level was attributable to cash borrowed by the company under a new term loan for the acquisition of Leonard Valve.
In the first three months of 2026, cash provided by operating activities totaled $129.4 million compared with $38.7 million in the year-ago period.
AOS’ Share Repurchases
In the first three months of 2026, A.O. Smith repurchased 0.7 million shares for $51.3 million. As of first quarter-end, approximately 5.1 million shares were left to be repurchased under the share repurchase authorization.
In January 2026, AOS’ board boosted the buyback program by another 5 million shares. For 2026, it expects to repurchase shares worth approximately $200 million.
A.O. Smith’s 2025 Outlook
A.O. Smith has provided the sales outlook for 2026. The company expects net sales to be in the range of $3.90-$4.00 billion compared with $3.90-$4.02 billion predicted earlier.
Management currently projects adjusted earnings per share to be in the band of $3.70-$4.00, lower than $3.85-$4.15 projected previously.
AOS’ Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the same space are discussed below:
DXP Enterprises (DXPE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased by 17.2%.
Kennametal (KMT - Free Report) presently sports a Zacks Rank of 1. Kennametal’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 35.4%. In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 earnings has increased 9%.
Powell Industries (POWL - Free Report) currently carries a Zacks Rank of 2. Powell’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 12.9%. In the past 60 days, the Zacks Consensus Estimate for Powell’s fiscal 2026 earnings has increased 3%.