Investors in A. O. Smith Corporation (NYSE:AOS) had a good week, as its shares rose 3.2% to close at US$67.41 following the release of its quarterly results. The result was positive overall - although revenues of US$964m were in line with what the analysts predicted, A. O. Smith surprised by delivering a statutory profit of US$0.95 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on A. O. Smith after the latest results.

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Taking into account the latest results, A. O. Smith's 15 analysts currently expect revenues in 2025 to be US$3.86b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 2.5% to US$3.77. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.83b and earnings per share (EPS) of US$3.75 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

View our latest analysis for A. O. Smith

The analysts reconfirmed their price target of US$75.43, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values A. O. Smith at US$84.00 per share, while the most bearish prices it at US$59.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await A. O. Smith shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the A. O. Smith's past performance and to peers in the same industry. We would highlight that A. O. Smith's revenue growth is expected to slow, with the forecast 2.0% annualised growth rate until the end of 2025 being well below the historical 6.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that A. O. Smith is also expected to grow slower than other industry participants.

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The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that A. O. Smith's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$75.43, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple A. O. Smith analysts - going out to 2027, and you can see them free on our platform here.

You can also view our analysis of A. O. Smith's balance sheet, and whether we think A. O. Smith is carrying too much debt, for free  on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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