A. O. Smith (NYSE:AOS) Lowered to Sell at Zacks Investment Research

A. O. Smith (NYSE:AOS) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a report issued on Tuesday, December 26th.

According to Zacks, “Over the past six months, A.O. Smith’s stock has outperformed the industry average. A flourishing water heater industry, robust consumer product demand in China and positive industry trends are likely to drive top-line growth, going forward. However, on the flip side, appreciation in steel prices is expected to put margins under pressure. Devaluation of the Chinese currency and rising selling and administrative expenses are expected to act as headwinds, going forward. Moreover, transition of the Chinese economy to a consumer driven one has resulted in a significant slowdown that might impact the company’s sales in the region.  Also, strong competition in the water boilers and heaters industry compounds the company’s challenges. This apart, costs related to ERP implementation and expansion pose as major threats for the company’s profitability.”

Several other equities analysts also recently commented on AOS. BMO Capital Markets reaffirmed a “buy” rating and issued a $60.00 target price on shares of A. O. Smith in a research report on Wednesday, September 6th. KeyCorp reissued a “hold” rating on shares of A. O. Smith in a research report on Tuesday, September 12th. Robert W. Baird reissued a “buy” rating and set a $64.00 price target on shares of A. O. Smith in a research report on Wednesday, October 4th. Stifel Nicolaus reissued a “hold” rating and set a $59.00 price target on shares of A. O. Smith in a research report on Thursday, October 12th. Finally, SunTrust Banks reissued a “buy” rating and set a $65.00 price target on shares of A. O. Smith in a research report on Thursday, October 12th. Five analysts have rated the stock with a hold rating and four have assigned a buy rating to the company’s stock. The stock has an average rating of “Hold” and an average price target of $62.40.

A. O. Smith (NYSE:AOS) opened at $65.32 on Tuesday. A. O. Smith has a 12-month low of $46.44 and a 12-month high of $65.37. The company has a debt-to-equity ratio of 0.27, a current ratio of 2.32 and a quick ratio of 1.92. The company has a market capitalization of $11,230.00, a P/E ratio of 32.02, a PEG ratio of 2.17 and a beta of 1.57.

A. O. Smith (NYSE:AOS) last posted its earnings results on Wednesday, October 25th. The industrial products company reported $0.54 EPS for the quarter, beating the consensus estimate of $0.53 by $0.01. A. O. Smith had a return on equity of 22.42% and a net margin of 12.18%. The company had revenue of $749.90 million for the quarter, compared to the consensus estimate of $741.28 million. During the same quarter in the prior year, the business earned $0.47 earnings per share. The firm’s revenue for the quarter was up 9.7% on a year-over-year basis. sell-side analysts expect that A. O. Smith will post 2.13 EPS for the current fiscal year.

In related news, CEO Ajita G. Rajendra sold 15,000 shares of the stock in a transaction that occurred on Tuesday, November 28th. The stock was sold at an average price of $61.81, for a total transaction of $927,150.00. Following the sale, the chief executive officer now owns 299,369 shares of the company’s stock, valued at $18,503,997.89. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, insider Kevin J. Wheeler sold 13,293 shares of the stock in a transaction that occurred on Wednesday, December 6th. The stock was sold at an average price of $61.49, for a total value of $817,386.57. Following the sale, the insider now directly owns 30,748 shares in the company, valued at approximately $1,890,694.52. The disclosure for this sale can be found here. Insiders have sold 100,156 shares of company stock worth $6,092,537 in the last three months. 1.27% of the stock is currently owned by company insiders.

Hedge funds have recently modified their holdings of the business. Toronto Dominion Bank boosted its holdings in shares of A. O. Smith by 11.8% in the 2nd quarter. Toronto Dominion Bank now owns 1,807 shares of the industrial products company’s stock valued at $102,000 after purchasing an additional 191 shares in the last quarter. Tower Research Capital LLC TRC boosted its holdings in shares of A. O. Smith by 973.5% in the 2nd quarter. Tower Research Capital LLC TRC now owns 1,825 shares of the industrial products company’s stock valued at $103,000 after purchasing an additional 1,655 shares in the last quarter. Northwestern Mutual Wealth Management Co. boosted its holdings in shares of A. O. Smith by 6.4% in the 2nd quarter. Northwestern Mutual Wealth Management Co. now owns 1,986 shares of the industrial products company’s stock valued at $112,000 after purchasing an additional 119 shares in the last quarter. Mountain Capital Investment Advisors Inc acquired a new stake in shares of A. O. Smith in the 2nd quarter valued at $124,000. Finally, Bronfman E.L. Rothschild L.P. boosted its holdings in shares of A. O. Smith by 3.6% in the 2nd quarter. Bronfman E.L. Rothschild L.P. now owns 3,362 shares of the industrial products company’s stock valued at $189,000 after purchasing an additional 116 shares in the last quarter. 74.93% of the stock is currently owned by hedge funds and other institutional investors.

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About A. O. Smith

A. O. Smith Corporation operates through two segments: North America and Rest of World. The Company’s Rest of World segment primarily consists of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas, gas tankless and electric water heaters, as well as water treatment products.

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