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AO Smith Corp.

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A.O. Smith has a robust earnings surprise history over the four trailing quarters, beating estimates all through. Solid execution by the company’s businesses in North America and China remains a strong growth driver. A.O. Smith’s dominant foothold in the North American water heater market coupled with thriving prospects in residential and commercial boiler markets are expected to boost growth. Also, the company’s business in China is expected to remain strong. However, on the flip side, strong appreciation in steel prices since the beginning of the year is expected to put margins under pressure. Also, devaluation of the Chinese currency and escalating SG&A and other corporate expenses are expected to act as significant headwinds in the forthcoming quarters. Also, intensifying competition in the water boilers and heaters industry compound the company’s challenges. 


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