Abstract

A.O. Smith will report its quarterly results on January 29, 2026 Pre-Market; this preview compiles last quarter’s results, management’s revenue and margin trajectory, and consensus expectations for revenue and adjusted EPS for the current quarter, alongside recent institutional opinion trends.

Market Forecast

Based on the company’s guidance framework and market consensus, A.O. Smith’s current quarter revenue is estimated at $928.26 million, with an expected adjusted EPS of $0.84, EBIT of $163.08 million, and a year-over-year revenue change of -2.69%, EPS change of -5.79%, and EBIT change of -7.33%. Margin commentary points to a near-term softer profile compared with recent run-rates, while the mix and pricing backdrop remain favorable to sustaining a high-30s gross margin and a low-teens net margin; YoY data embedded in the estimates imply slight compression this quarter.

The company’s main business remains water heaters and related parts, where management is focused on maintaining price discipline and recapturing volume in replacement demand channels. The most promising segment is water treatment products, supported by ongoing premiumization and channel penetration; this business contributed $59.90 million in the last quarter, and the company is targeting continued YoY growth as demand normalizes.

Last Quarter Review

A.O. Smith’s previous quarter delivered revenue of $942.50 million, a gross profit margin of 38.67%, GAAP net profit attributable to shareholders of $132.00 million, a net profit margin of 14.01%, and adjusted EPS of $0.94, with year-over-year revenue growth of 4.42% and adjusted EPS growth of 14.63%. Net income softened sequentially, with quarter-on-quarter net profit down 13.27%, while margins were resilient, supported by favorable price/cost dynamics and product mix.

Main business performance was led by water heaters and related parts at $604.90 million, followed by boilers and related parts at $78.00 million, and water treatment products at $59.90 million; management emphasized replacement-cycle stability in North America and disciplined channel inventory, setting a constructive base for the upcoming quarter.

Current Quarter Outlook (with major analytical insights)

Water heaters and related parts — core revenue engine and pricing power

Water heaters and related parts represent the largest revenue contributor at $604.90 million last quarter, reinforcing the segment’s centrality to A.O. Smith’s cash generation. For the current quarter, consensus implies a slight revenue pullback quarter-over-quarter consistent with typical seasonality, but price realization and a normalized steel cost environment continue to underpin high-30s gross margins. The demand profile hinges on replacement activity, which tends to be less cyclical than new construction; within this, premium and high-efficiency models remain a lever for mix improvement. Channel inventory data and order cadence suggest stable sell-through as distributors align inventory with normalized lead times. The key variable to monitor is the pace of residential replacement versus new-build exposure, which could temper unit volume even as price/mix holds. With management maintaining a disciplined promotional stance, we expect EBIT flow-through to track near historical conversion despite YoY margin compression embedded in consensus.

Water treatment products — expanding addressable base and premiumization tailwinds

Water treatment products generated $59.90 million last quarter and remain an area of longer-term growth potential through innovation and cross-channel expansion. In the current quarter, revenue comparisons are sensitive to channel reorder patterns, yet the category benefits from ongoing consumer interest in high-utility filtration and softening solutions. A.O. Smith’s brand equity in residential water quality solutions supports premium price points, and the company’s investment in product breadth and digital marketing is expected to sustain mid-single-digit to high-single-digit growth trajectories when demand normalizes. Margin structure in water treatment can be accretive with scale and mix; progress toward higher-ASP systems and consumables can support gross margin stability even in a softer revenue environment. Inventory normalization at key retail and wholesale partners is a swing factor; smoother order flow could translate to steadier quarterly results as the year progresses.

Boilers and related parts — commercial cycles and retrofit demand

Boilers and related parts contributed $78.00 million last quarter and tend to be influenced by non-residential project timing and retrofit cycles. For this quarter, consensus does not point to a significant pivot in non-residential trends, but retrofit and service work provide a baseline of activity. The margin profile in boilers is supported by engineered product content and aftermarket revenues, although project phasing can introduce quarterly lumpiness. An important driver for the segment is regulatory and efficiency upgrades, which can catalyze orders even in a mixed macro backdrop. We expect stable to mildly softer revenue as projects roll through the pipeline, with supply chain conditions and lead times no longer acting as a major constraint.

Key factors likely to influence the stock this quarter — mix, costs, and demand elasticity

The stock’s reaction will likely hinge on whether A.O. Smith can keep gross margin near last quarter’s 38.67% despite a forecast revenue dip. Favorable input costs, particularly steel, and disciplined pricing suggest resilience, but consensus already builds in some compression, raising the importance of mix and operating leverage. Any commentary on order trends in North America residential replacement will be closely watched, as will signals on channel inventory and demand elasticity under current pricing. Another catalyst is update on water treatment growth initiatives and attach rates for consumables; tangible evidence of accelerating sell-through here would support the multiple even if consolidated revenue is flat to modestly lower YoY. Capital allocation signals, including buybacks and potential bolt-on M&A in water quality, may also influence sentiment.

Analyst Opinions

Recent institutional views skew positive. Within the past six months, one well-known sell-side institution reiterated a Buy rating with a target price of $88.00, while another maintained a Hold rating with a $76.00 target; the ratio of bullish to bearish/neutral opinions is 1:0 when considering Buy versus negative calls, or 1:1 when including Hold, indicating a tilt toward positive commentary. The Buy-leaning camp expects resilient replacement-driven demand, supportive mix, and pricing discipline to keep margins elevated in a mid-cycle environment. A representative bullish view emphasizes that even with a forecast revenue decline of -2.69% and EPS of $0.84 this quarter, the company’s high-30s gross margin and cash generation underpin valuation support and potential upside if demand trends stabilize. On balance, the majority view we highlight is constructive, centering on robust core profitability and a gradual growth path for water treatment that could provide incremental upside as the year evolves.