A. O. Smith Corporation AOS is set to release fourth-quarter 2024 results on Jan. 30, before the opening bell.

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The Zacks Consensus Estimate for revenues is pegged at $952.2 million, which indicates a decline of 3.6% from the year-ago quarter’s figure. The consensus mark for earnings is pinned at 89 cents per share, which has declined by a penny in the past 60 days. The estimate indicates a decrease of 8.3% from the figure reported in the year-ago quarter.

The company’s bottom line matched the Zacks Consensus Estimate in the last reported quarter. It has a trailing four-quarter earnings surprise of 0.3%, on average, as it beat estimates twice, missed once and matched the same once.

Factors Likely to Influence AOS’ Q4 Results

A. O. Smith’s North-American segment is expected to have benefited from strong demand for commercial boilers and water treatment products, supported by its robust direct and retail selling channels in the fourth quarter. However, softness in the residential and commercial water heater industry is expected to weigh on its results. We expect revenues from the company’s North-American segment to inch down 0.9% year over year to $731 million in the fourth quarter.

Weak consumer demand for its residential water treatment and water heating products in China is likely to have impacted the performance of the Rest of the World segment. A. O. Smith lowered its 2024 third-party sales outlook for China. 

It currently expects the metric to decline 6-8% year over year in local currency against growth of 0-3% expected earlier. However, the segment’s results are likely to reflect the benefits of the healthy demand environment for its water treatment products in India. Our estimate for fourth-quarter revenues from the Rest of the World segment is pegged at $235 million, indicating a decrease of 9.6% year over year.

Acquisitions made by A. O. Smith are likely to have impacted its top line positively. For instance, in November 2024, the company acquired the Pureit business from Unilever. The inclusion of Pureit’s expertise in water treatment solutions, coupled with its strong brand recognition, enabled AOS to expand its customer offerings and boost its position in the water treatment industry in India. Also, in March 2024, it acquired the privately held water treatment company Impact Water Products, which expanded its water treatment footprint in North America. Impact Water Products is included in the North America segment.

Over time, A. O. Smith’s performance has been negatively impacted by high costs and expenses. Although supply-chain constraints moderated, labor shortage and an increase in material costs are likely to have played spoilsport.

Earnings Whispers

Our proven model suggests an earnings beat for AOS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as elaborated below.

Earnings ESP: A. O. Smith has an Earnings ESP of +0.93% as the Most Accurate Estimate is pegged at 90 cents per share, which is higher than the Zacks Consensus Estimate of 89 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: A. O. Smith currently carries a Zacks Rank of 3.

Other Stocks With the Favorable Combination

Here are a few other companies, which according to our model, have the right combination to beat on earnings this reporting cycle:

Enersys ENS has an Earnings ESP of +7.24% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is scheduled to release third-quarter fiscal 2025 (ended December 2024) results on Feb. 5. Enersys’ earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 1.6%.

Flowserve Corporation FLS has an Earnings ESP of +2.60% and a Zacks Rank of 3 at present. The company is slated to release fourth-quarter results on Feb. 18.

Flowserve’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark in one, the average surprise being 10.8%.

Parker-Hannifin Corporation PH has an Earnings ESP of +0.52% and a Zacks Rank of 3 at present. It is slated to release second-quarter fiscal 2025 (ended December 2024) results on Jan. 30.

Parker-Hannifin’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 8.4%.

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