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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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. The Motley Fool has no positions in the stocks mentioned above. 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.