The 10-second takeaway
For the quarter ended March 31 (Q1), AO Smith met expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share dropped. GAAP earnings per share shrank significantly.
Gross margins increased, operating margins expanded, net margins contracted.
AO Smith recorded revenue of $509.6 million. The 11 analysts polled by S&P Capital IQ expected a top line of $507.8 million on the same basis. GAAP reported sales were 8.7% higher than the prior-year quarter's $468.6 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 $0.96. The 13 earnings estimates compiled by S&P Capital IQ anticipated $0.77 per share. Non-GAAP EPS of $0.96 for Q1 were 5.9% lower than the prior-year quarter's $1.02 per share. GAAP EPS of $0.84 for Q1 were 18% lower than the prior-year quarter's $1.02 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 35.2%, 340 basis points better than the prior-year quarter. Operating margin was 11.6%, 230 basis points better than the prior-year quarter. Net margin was 7.7%, 240 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $520.3 million. On the bottom line, the average EPS estimate is $0.86.
Next year's average estimate for revenue is $2.10 billion. The average EPS estimate is $3.46.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 169 members out of 174 rating the stock outperform, and five members rating it underperform. Among 48 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 47 give AO Smith a green thumbs-up, and one 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 $71.50.
Looking for alternatives to AO Smith? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.
- Add AO Smith to My Watchlist.
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 position in any of the stocks mentioned. 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.