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A. O. Smith Corporation (AOS), headquartered in Milwaukee, Wisconsin, manufactures and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks, and water treatment products. With a market cap of $9.1 billion, the company specializes in offering innovative and energy-efficient solutions and products, which are developed and sold on a global platform.
Companies worth $2 billion or more are generally described as “mid-cap stocks,” and AOS perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the specialty industrial machinery industry. AOS’ strengths include its diversified portfolio, which hedges against market downturns, and its large scale, driving cost efficiencies. The company's strong brand equity, built on decades of reliability and innovation, translates into pricing power and customer loyalty. AOS’ financial resilience provides strategic flexibility, while its focus on R&D and innovation positions it well for emerging trends in energy-efficient and eco-friendly products. Its efficient supply chain and performance-driven culture further solidify its competitive edge.
Despite its notable strength, AOS slipped 29.7% from its 52-week high of $92.45, achieved on Jul. 18, 2024. Over the past three months, AOS stock declined 2.2%, underperforming the S&P 500 Index’s ($SPX) 5.6% rise during the same time frame.

In the longer term, shares of AOS dipped 4.8% on a YTD basis and fell 23.1% over the past 52 weeks, underperforming SPX’s YTD gains of 3.6% and 11.8% returns over the last year.
To confirm the bearish trend, AOS has been trading below its 50-day moving average over the past year, with small fluctuations. The stock is trading below its 200-day moving average since early August, 2024.

AOS’ underperformance can be linked to lower water heater volumes in North America and sluggish sales in China.
On Apr. 29, AOS shares closed up more than 3% after reporting its Q1 results. Its EPS of $0.95 topped Wall Street expectations of $0.90. The company’s revenue was $963.9 million, beating Wall Street forecasts of $947.3 million. AOS expects full-year adjusted EPS in the range of $3.60 to $3.90, and expects revenue in the range of $3.8 billion to $3.9 billion.
In the competitive arena of specialty industrial machinery, Illinois Tool Works Inc. (ITW) has taken the lead over AOS, showing resilience with 3.1% losses on a YTD basis and 1.3% returns over the past 52 weeks.
Wall Street analysts are cautious on AOS’ prospects. The stock has a consensus “Hold” rating from the 11 analysts covering it, and the mean price target of $73.78 suggests a potential upside of 13.6% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.