AO Smith Corp Gets a Hold Rating from Oppenheimer

By Carrie Williams

In a report released yesterday, Jim Giannakouros from Oppenheimer maintained a Hold rating on AO Smith Corp (NYSE: AOS). The company’s shares closed yesterday at $66.78, close to its 52-week high of $68.39.

Giannakouros said:

“AOS reported 4Q17 adj. EPS of $0.60, above our $0.56E on stronger segment profitability (+$0.02) and a favorable tax rate (+$0.02). The quarter capped another record year for the company (adj. EPS +17% to $2.17), with sustained demand strength in China, India, NA water treatment and boilers (collectively >40% of sales, growing double-digits) supporting high-single-digit top-line momentum into FY18. That said, price/cost (steel) headwinds may pressure NA margins and China operating leverage near-term (primary watch item on the AOS story, in our view) could be further restricted by the transition to a new water treatment / air purification manufacturing plant. Given continued concerns about ROW margin trajectory and valuation (~17x ’18E EBITDA), we remain on the sidelines.”

According to, Giannakouros is a 4-star analyst with an average return of 7.8% and a 59.7% success rate. Giannakouros covers the Industrial Goods sector, focusing on stocks such as Lincoln Electric Holdings, Watts Water Technologies, and Carlisle Companies Inc.

Currently, the analyst consensus on AO Smith Corp is Moderate Buy and the average price target is $73, representing a 9.3% upside.

In a report issued on January 30, Boenning & Scattergood also maintained a Hold rating on the stock.

Based on AO Smith Corp’s latest earnings report for the quarter ending December 31, the company posted quarterly revenue of $769 million and quarterly net profit of $105 million. In comparison, last year the company earned revenue of $698 million and had a net profit of $82.7 million.

Based on the recent corporate insider activity of 59 insiders, corporate insider sentiment is negative on the stock. Most recently, in December 2017, Wilfridus Brouwer, the President – AOSHBSRL of AOS sold 7,644 shares for a total of $470,718.

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A. O. Smith Corp. manufactures residential and commercial water heating equipment and air purification products. It operates through the North America and Rest of World segments. The North America segment manufactures and globally markets specialty commercial water heating equipment, condensing and non-condensing boilers, and water systems tanks.