Smith (A.O.) (AOS) Lifted to “Buy” at Zacks Investment Research

Zacks Investment Research upgraded shares of Smith (A.O.) (NYSE:AOS) from a hold rating to a buy rating in a report issued on Wednesday. Zacks Investment Research currently has $72.00 price target on the industrial products company’s stock.

According to Zacks, “Over the past six months, A.O. Smith’s stock has outperformed the industry average. The company also has an impressive earnings surprise history, having beaten estimates thrice over the four trailing quarters.  A flourishing water heater industry, robust consumer product demand in China and positive industry trends are likely to drive top-line growth, going forward. Hague products and Aquasana have also significantly boosted the company’s sales. Also, a dominant foothold in the North American water heater market, driven by new construction and expansion of replacement demand, is likely to stoke growth. However, over the past few quarters, the company’s SG&A expenses in China (including elevated steel costs and higher fees paid to installers) have been quite high, which is creating pressure on the company’s operating margins.”

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A number of other research firms have also issued reports on AOS. BMO Capital Markets reissued a buy rating and set a $78.00 price target on shares of Smith (A.O.) in a research report on Friday, January 26th. Robert W. Baird reissued a buy rating and set a $70.00 price target on shares of Smith (A.O.) in a research report on Wednesday, January 31st. Boenning Scattergood reissued a hold rating on shares of Smith (A.O.) in a research report on Tuesday, January 30th. ValuEngine raised shares of Smith (A.O.) from a hold rating to a buy rating in a research report on Wednesday, April 4th. Finally, Goldman Sachs raised shares of Smith (A.O.) from a neutral rating to a buy rating in a research report on Wednesday, April 4th. Three investment analysts have rated the stock with a hold rating and nine have issued a buy rating to the stock. The company currently has an average rating of Buy and an average target price of $68.00.

AOS opened at $63.79 on Wednesday. Smith has a 12-month low of $49.64 and a 12-month high of $68.39. The company has a quick ratio of 1.87, a current ratio of 2.24 and a debt-to-equity ratio of 0.24. The company has a market cap of $10,974.99, a price-to-earnings ratio of 29.40, a price-to-earnings-growth ratio of 1.87 and a beta of 1.52.

Smith (A.O.) (NYSE:AOS) last posted its quarterly earnings results on Tuesday, January 30th. The industrial products company reported $0.60 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.56 by $0.04. Smith (A.O.) had a net margin of 9.89% and a return on equity of 23.30%. The company had revenue of $768.60 million during the quarter, compared to analyst estimates of $767.45 million. During the same period last year, the firm posted $0.47 EPS. Smith (A.O.)’s revenue for the quarter was up 10.1% compared to the same quarter last year. analysts expect that Smith will post 2.57 EPS for the current year.

The company also recently announced a quarterly dividend, which will be paid on Tuesday, May 15th. Stockholders of record on Monday, April 30th will be issued a dividend of $0.18 per share. This represents a $0.72 annualized dividend and a dividend yield of 1.13%. The ex-dividend date of this dividend is Friday, April 27th. Smith (A.O.)’s dividend payout ratio (DPR) is 33.18%.

In other news, Director Mark D. Smith sold 2,600 shares of Smith (A.O.) stock in a transaction that occurred on Monday, March 5th. The shares were sold at an average price of $62.73, for a total transaction of $163,098.00. Following the completion of the transaction, the director now directly owns 109,609 shares of the company’s stock, valued at approximately $6,875,772.57. The transaction was disclosed in a legal filing with the SEC, which is available through the SEC website. Also, Chairman Ajita G. Rajendra sold 5,000 shares of Smith (A.O.) stock in a transaction that occurred on Wednesday, February 21st. The shares were sold at an average price of $66.55, for a total transaction of $332,750.00. Following the transaction, the chairman now directly owns 301,018 shares of the company’s stock, valued at $20,032,747.90. The disclosure for this sale can be found here. Over the last ninety days, insiders have sold 110,635 shares of company stock valued at $7,149,622. Insiders own 1.28% of the company’s stock.

Several large investors have recently bought and sold shares of AOS. Tower Research Capital LLC TRC increased its holdings in shares of Smith (A.O.) by 70.4% during the 4th quarter. Tower Research Capital LLC TRC now owns 2,784 shares of the industrial products company’s stock valued at $171,000 after purchasing an additional 1,150 shares in the last quarter. Zeke Capital Advisors LLC purchased a new position in shares of Smith (A.O.) during the 4th quarter valued at approximately $203,000. Commerzbank Aktiengesellschaft FI acquired a new stake in Smith (A.O.) in the 4th quarter valued at $210,000. Brookmont Capital Management acquired a new stake in Smith (A.O.) in the 4th quarter valued at $224,000. Finally, Wellington Shields Capital Management LLC acquired a new stake in Smith (A.O.) in the 4th quarter valued at $245,000. 74.86% of the stock is owned by hedge funds and other institutional investors.

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About Smith (A.O.)

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, and water treatment products in North America, China, Europe, and India. The company offers water heaters for residences, restaurants, hotels and motels, office buildings, laundries, car washes, and small businesses; residential and commercial boilers for use in space heating applications for hospitals, schools, hotels, and other large commercial buildings; and water treatment products, including on-the-go filtration bottles, point-of-use carbon and reverse osmosis products, point-of-entry water softeners, and whole-home water filtrations products for residences, restaurants, hotels, and offices.

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