[ad_1]
A.O. Smith Corp.’s stock jumped 12% Tuesday to lead S&P 500 gainers after the maker of water-heating equipment and boilers blew past earnings estimates for the fourth quarter.
The stock
AOS,
is on track to close at its highest level since April 21, 2022, according to the Dow Jones market data team. It’s also on track for its best month since July 2022, with gains of more than 13%.
Milwaukee-based A.O. Smith said inflation-related pricing actions — or higher prices — and higher volumes of energy-efficient boilers more than offset market challenges such as significant U.S. residential water-heater destocking activity, which hurt residential water-heater volumes in the second half.
The company had repeatedly warned of the water-heater issue, which is partly due to supply-chain snags during the pandemic as well as to a weak housing market.
Chief Executive Kevin Wheeler said in a statement Tuesday that the company, which also offers water-treatment services, also grappled with “lingering but improved headwinds in the supply chain, inflation, and COVID-19 related disruptions in China,” a key market.
The acquisition of Canada’s Giant Factories Inc. added $94 million to 2022 sales, he said.
The company posted a net loss of $120.1 million, or 78 cents a share, for the quarter, after earnings of $139.6 million, or 87 cents a share, in the same period of the previous year. Excluding a pension-settlement charge, the company posted per-share earnings of 86 cents, ahead of the FactSet consensus of 79 cents.
Sales fell 6% to $936.1 million from $995.5 million a year ago but were ahead of the $919 million FactSet consensus.
From the archive: How one U.S. company is addressing China’s air pollution problem
So-called rest-of-the-world sales were hit by the strong dollar and lower consumer demand during China’s COVID lockdown. Sales in India, another major market, rose 16% in local currency.
For 2023, the company is expecting adjusted earnings per share of $3.15 to $3.45, which compares with a FactSet consensus of $3.41. It expects sales of $3.64 billion to $3.865 billion, compared with a FactSet consensus of $3.8 billion.
“We enter 2023 with the inventory adjustments in the wholesale residential market largely behind us while staying mindful of headwinds in new home construction, which we believe remains in a deficit position,” said Wheeler. “In China, we believe the lifting of certain COVID-19-related restrictions is a positive step to an improved economic environment.”
D.A. Davidson said the numbers and 2023 guidance “are quite impressive,” with analyst Matt J. Summerville reiterating a buy rating on the stock.
“EPS guidance came in well above our conservative view heading into the print,” Summerville wrote in a note to clients. “[A.O. Smith’s] balance sheet remains very strong. We are positively disposed towards the defensiveness of its largely replacement-driven business in North America, favorable market share trends in China, and another strong RoW (Rest of the World) growth driver in India.”
A.O. Smith stock has fallen 13% in the last 12 months, while the S&P 500
SPX,
has fallen 10%.
[ad_2]
Source link
