The 10-second takeaway
For the quarter ended March 31 (Q1), A.O. Smith met expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue increased and GAAP earnings per share improved significantly.
Margins grew across the board.
A.O. Smith reported revenue of $468.6 million. The nine analysts polled by S&P Capital IQ expected sales of $469.0 million on the same basis. GAAP reported sales were 12% higher than the prior-year quarter's $417.4 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 $1.02. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.61 per share. GAAP EPS of $1.02 for Q1 were 16% higher than the prior-year quarter's $0.88 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 31.8%, 140 basis points better than the prior-year quarter. Operating margin was 9.3%, 30 basis points better than the prior-year quarter. Net margin was 10.1%, 30 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $480.2 million. On the bottom line, the average EPS estimate is $0.67.
Next year's average estimate for revenue is $1.94 billion. The average EPS estimate is $2.87.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 149 members out of 154 rating the stock outperform, and five members rating it underperform. Among 45 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 43 give A.O. 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 A.O. Smith is outperform, with an average price target of $50.40.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.