Next up in our series of earnings previews: an American standard. Actually, theAmerican Standard (NYSE:ASD), best known for its kitchen and bath fixtures, but also a big name in HVAC and vehicle control systems.

Wall Street Wisdom:

  • General consensus. Eighteen analysts follow American Standard. Of these, only one rates the stock a "sell," with the rest split pretty evenly between "buy" and "hold."
  • Revenues. Analysts expect to see American Standard's sales rise modestly tomorrow, up 6% year over year to $2.49 billion.
  • Earnings. In comparison to last year's fourth quarter, Q4 2005 is going to look pretty good. A series of one-time charges that American Standard took one year ago netted the company a $0.40 per-share loss (or if you prefer, a $0.46 "pro forma" profit). This quarter, analysts are looking for $0.46 per share (pro forma, again). The company itself predicted a profit of $0.28 to $0.32 under GAAP in its earnings release last quarter.

Margin watch:
2005 was not kind to American Standard. It began in February, with a $188 million "big bath" that the company took to account for anticipated charges based on asbestos liability. As successive quarters rolled in, each carried with it a restructuring charge that further dampened results. Take a look at the results:

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

26.2

27.1

27.4

27.4

27.6

27.6

Op.

9.4

9.7

9.7

9.7

9.9

9.9

Net

5.0

5.2

3.3

3.7

4.1

4.0
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish lookout:
As you can see from the above, American Standard's gross margin, which wasn't impacted at all by these restructuring charges, has remained strong -- even growing slightly. Same story for the operating margin. Where you see the charges bite is on the net margin line -- and importantly, you're seeing those results improve the further away we get from last February's big bath. Tomorrow, expect to see the margins improve once more in comparison to last year. That's pretty much a given when you're comparing a negative to a positive.

Fool contributor Rich Smith does not own shares of American Standard.