NEW YORK (TheStreet) -- A. O. Smith Corporation (AOS - Get Report) has been upgraded to "outperform" from "neutral" with a $53 price target, Wedbush said Wednesday. The firm said the company's growth outlook remains encouraging.
Separately, TheStreet Ratings team rates SMITH (A O) CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SMITH (A O) CORP (AOS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AOS's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 6.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- AOS's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AOS has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, AOS's share price has jumped by 33.22%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AOS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- 38.90% is the gross profit margin for SMITH (A O) CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.58% is above that of the industry average.
- Net operating cash flow has increased to $91.60 million or 30.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.94%.
- You can view the full analysis from the report here: AOS Ratings Report