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A. O. Smith (AOS) Q1 Earnings & Revenues Miss Estimates

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A. O. Smith Corporation (AOS - Free Report) reported disappointing first-quarter 2019 results wherein earnings and revenues lagged estimates.

The company’s adjusted earnings were 53 cents per share, missing the Zacks Consensus Estimate of 59 cents. Also, the bottom line recorded a decline from the year-ago figure of 60 cents.

Inside the Headlines

The company’s sales decreased 5.1% year over year to $748.2 million. The decline was primarily attributable to fall of sales in China. Also, the figure missed the Zacks Consensus Estimate of $765 million.

A. O. Smith Corporation Price, Consensus and EPS Surprise

A. O. Smith Corporation Price, Consensus and EPS Surprise | A. O. Smith Corporation Quote

A.O. Smith’s sales in the North America segment (comprising U.S. and Canadian water heaters and boilers) increased 4% year over year to $521.8 million. Increased sales volumes of boilers and water treatment products proved beneficial for the segment.

Segmental operating earnings rose 9.4% year over year to $116 million. The growth was primarily attributable to higher sales, partially offset by rise in steel and other input costs.

Quarterly sales at the Rest of the World segment (including China, India and Europe) were down 21% year over year to $232.1 million. The decline was primarily attributable to fall in sales of water heaters and air purifiers, particularly in China.

Operating earnings at the segment plunged 65.9% year over year to $12.3 million in the quarter. Lower sales in China and increase in currency translation proved detrimental to the segment’s income.

Share Repurchases

In first quarter of 2019, A.O. Smith repurchased around 0.9 million shares for $45.6 million. At the end of the quarter, the company had approximately 5.2 million shares remaining under the existing discretionary repurchase authority.

Liquidity & Cash Flow

On Mar 31, 2019, A.O. Smith’s cash and cash equivalents totaled $337.8 million compared with $259.7 million as of Dec 31, 2018.

At the end of the reported quarter, long-term debt was $277.6 million compared with $221.8 million as of Dec 31, 2018.

Guidance

Concurrent with first-quarter results, the company revised guidance for 2019. It expects adjusted earnings to lie in the range of $2.69-$2.75 per share compared with the previous estimation of $2.67-$2.77.

Zacks Rank & Key Picks

A.O. Smith currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are DXP Enterprises, Inc. (DXPE - Free Report) , Dover Corporation (DOV - Free Report) and Cintas Corporation (CTAS - Free Report) . While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), Dover and Cintas carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DXP Enterprises surpassed estimates thrice in the trailing four quarters, the average beat being 46.55%.

Dover exceeded estimates in each of the trailing four quarters, the average beat being 8.61%.

Cintas surpassed estimates in each of the trailing four quarters, the average beat being 6.09%.

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