A. O. Smith Q3 revenue flat, misses expectations on China weakness

Overview

• U.S. water technology maker's Q3 revenue was flat yr/yr and missed analyst expectations

• Adjusted EPS for Q3 beat analyst expectations

• Company announced sale of 81% stake in China business, retaining 19% and brand license

Outlook

• Company updates 2026 guidance to exclude China business for entire yr

• A O Smith sees 2026 net sales excluding China at $3.27 bln-$3.29 bln

• Company expects 2026 adjusted EPS excluding China of $3.42-$3.52

Result Drivers

• BOILER SALES & ACQUISITION - Co said North America sales rose due to higher boiler volumes, pricing actions and Leonard Valve acquisition, offset by lower residential water heater volumes

• CHINA WEAKNESS - Co said Rest of World sales fell due to continued weak consumer demand in China

• HIGHER INPUT COSTS - Co said North America margin declined due to lower residential water heater volumes and higher input costs

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 9 "hold" and 2 "sell" or "strong sell"

• The average consensus recommendation for the electrical components & equipment peer group is "buy."

• Wall Street's median 12-month price target for A. O. Smith Corporation is $67.00, about 10.1% above its October 28 closing price of $60.86

• The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 16 three months ago

Reuters Recommended Reads

• Oct 29 - Air conditioner maker Carrier Q3 revenue rises on data center demand, raises FY outlook

• Oct 29 - Trane Technologies Q3 revenue beats estimates on booking growth; raises guidance

• Oct 27 - Ireland's Johnson Controls Q4 sales rise 10%, slightly beat estimates

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)