The 10-second takeaway
For the quarter ended Sep. 30 (Q3), AO Smith missed estimates on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share dropped significantly.
Gross margins grew, operating margins increased, net margins contracted.
AO Smith logged revenue of $462.2 million. The 12 analysts polled by S&P Capital IQ expected to see sales of $472.3 million on the same basis. GAAP reported sales were 12% higher than the prior-year quarter's $412.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.70. The 14 earnings estimates compiled by S&P Capital IQ predicted $0.69 per share. GAAP EPS of $0.79 for Q3 were 80% lower than the prior-year quarter's $3.91 per share. (The prior-year quarter included $3.33 per share in earnings from discontinued operations.)
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 33.9%, 510 basis points better than the prior-year quarter. Operating margin was 9.8%, 230 basis points better than the prior-year quarter. Net margin was 8.0%, 3,620 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $505.3 million. On the bottom line, the average EPS estimate is $0.81.
Next year's average estimate for revenue is $1.93 billion. The average EPS estimate is $2.92.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 158 members out of 162 rating the stock outperform, and four members rating it underperform. Among 37 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 35 give AO Smith a green thumbs-up, and two give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on AO Smith is outperform, with an average price target of $60.10.
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