Smith (A.O.) Corporation (AOS) Downgraded to “Hold” at Zacks Investment Research

Zacks Investment Research lowered shares of Smith (A.O.) Corporation (NYSE:AOS) from a buy rating to a hold rating in a research report sent to investors on Monday, July 31st.

According to Zacks, “A.O. Smith’s second-quarter 2017 earnings per share came in line with the Zacks Consensus Estimate, and was up 8.2% from the year-ago figure supported by robust sales growth. The thriving water heater industry and positive industry trends are likely to raise the top line, going forward. Acquisition of residential water treatment firm, Aquasana, has significantly boosted the company’s sales. Over the past six months, A.O. Smith’s stock has outperformed the industry average. However, on the flip side, appreciation in steel prices since the beginning of the year is expected to put margins under pressure. Also, devaluation of the Chinese currency and escalating SG&A and other corporate expenses are expected to act as significant headwinds in the forthcoming quarters. Also, strong competition in the water boilers and heaters industry compounds the company’s challenges.”

AOS has been the topic of several other reports. BidaskClub lowered Smith (A.O.) Corporation from a strong-buy rating to a buy rating in a research report on Monday, July 24th. BMO Capital Markets reaffirmed a buy rating and set a $60.00 target price on shares of Smith (A.O.) Corporation in a research report on Friday, July 28th. Jefferies Group LLC set a $60.00 target price on Smith (A.O.) Corporation and gave the stock a buy rating in a research report on Thursday, June 1st. Boenning Scattergood reaffirmed a buy rating on shares of Smith (A.O.) Corporation in a research report on Wednesday, July 26th. Finally, KeyCorp reiterated a sector weight rating on shares of Smith (A.O.) Corporation in a research note on Friday, April 28th. They noted that the move was a valuation call. Three investment analysts have rated the stock with a hold rating and three have assigned a buy rating to the stock. The company presently has a consensus rating of Buy and a consensus price target of $68.00.

Shares of Smith (NYSE:AOS) opened at 53.93 on Monday. The firm has a 50-day moving average price of $55.45 and a 200-day moving average price of $53.20. Smith has a 52-week low of $43.66 and a 52-week high of $57.97. The stock has a market cap of $9.30 billion, a P/E ratio of 27.38 and a beta of 1.51.

Smith (A.O.) Corporation (NYSE:AOS) last released its quarterly earnings data on Wednesday, July 26th. The industrial products company reported $0.53 EPS for the quarter, meeting the consensus estimate of $0.53. Smith (A.O.) Corporation had a return on equity of 22.25% and a net margin of 12.10%. The company had revenue of $738.20 million for the quarter, compared to analyst estimates of $729.33 million. During the same period last year, the company posted $0.49 earnings per share. The firm’s revenue was up 10.7% compared to the same quarter last year. On average, analysts anticipate that Smith will post $2.11 EPS for the current fiscal year.

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The firm also recently declared a quarterly dividend, which was paid on Tuesday, August 15th. Stockholders of record on Monday, July 31st were issued a dividend of $0.14 per share. The ex-dividend date was Thursday, July 27th. This represents a $0.56 dividend on an annualized basis and a dividend yield of 1.04%. Smith (A.O.) Corporation’s dividend payout ratio (DPR) is presently 28.43%.

In related news, Director Ronald D. Brown sold 8,000 shares of the business’s stock in a transaction that occurred on Wednesday, May 24th. The stock was sold at an average price of $54.25, for a total transaction of $434,000.00. Following the sale, the director now owns 43,896 shares of the company’s stock, valued at $2,381,358. The sale was disclosed in a filing with the SEC, which is available through the SEC website. Also, Director Paul W. Jones sold 60,000 shares of the business’s stock in a transaction that occurred on Thursday, August 3rd. The stock was sold at an average price of $54.02, for a total value of $3,241,200.00. Following the sale, the director now directly owns 277,465 shares in the company, valued at approximately $14,988,659.30. The disclosure for this sale can be found here. In the last ninety days, insiders have sold 105,400 shares of company stock worth $5,734,444. Corporate insiders own 1.27% of the company’s stock.

Several hedge funds and other institutional investors have recently bought and sold shares of AOS. BlackRock Inc. boosted its position in Smith (A.O.) Corporation by 4,592.7% in the first quarter. BlackRock Inc. now owns 13,065,205 shares of the industrial products company’s stock valued at $668,415,000 after buying an additional 12,786,787 shares in the last quarter. Janus Henderson Group PLC boosted its position in Smith (A.O.) Corporation by 49,147.8% in the second quarter. Janus Henderson Group PLC now owns 7,631,439 shares of the industrial products company’s stock valued at $429,879,000 after buying an additional 7,615,943 shares during the last quarter. Janus Capital Management LLC boosted its position in Smith (A.O.) Corporation by 18.5% in the first quarter. Janus Capital Management LLC now owns 8,349,956 shares of the industrial products company’s stock valued at $427,184,000 after buying an additional 1,306,490 shares during the last quarter. Alliancebernstein L.P. boosted its position in Smith (A.O.) Corporation by 38.1% in the first quarter. Alliancebernstein L.P. now owns 3,679,499 shares of the industrial products company’s stock valued at $188,243,000 after buying an additional 1,014,464 shares during the last quarter. Finally, State Street Corp boosted its position in Smith (A.O.) Corporation by 12.5% in the first quarter. State Street Corp now owns 7,049,020 shares of the industrial products company’s stock valued at $360,634,000 after buying an additional 781,403 shares during the last quarter. 74.89% of the stock is currently owned by institutional investors.

About Smith (A.O.) Corporation

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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