AOS Stock Forecast & Price Target

A.O. Smith reported sales of $713.7 million for 4Q24, reflecting a year-over-year increase of 3.5%, primarily driven by strategic pricing actions. The company anticipates growth in its North American segment, specifically projecting a 6%-8% increase in boiler sales and a 10%-12% rise in water treatment sales, supported by price capture and the adoption of higher efficiency technologies. Furthermore, the company's international revenues, particularly from India, demonstrated robust growth, further solidifying A.O. Smith's favorable market position and potential for margin expansion through product development and cost management.

A.O. Smith reported a decline in adjusted operating income to $16.0 million (7.8% of sales) in the latest quarter, compared to $19.1 million (8.1% of sales) in the prior year, largely driven by decreased sales volumes in China amid ongoing economic challenges and weak consumer sentiment. Total sales decreased by 13.1% year-over-year, with a significant drop in China volumes contributing to the negative performance, despite an 18% growth in the legacy India business. The company's ongoing strategic review of its China operations indicates expected headwinds and persistent challenges, with anticipated sales declines of mid-single digits in the region for 2026, undermining any potential growth prospects.