Last week, you might have seen that A. O. Smith Corporation (NYSE:AOS) released its full-year result to the market. The early response was not positive, with shares down 4.4% to US$43.45 in the past week. A. O. Smith reported in line with analyst predictions, delivering revenues of US$3.0b and statutory earnings per share of US$2.22, suggesting the business is executing well and in line with its plan. Following the result, 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

View our latest analysis for A. O. Smith

Following the latest results, A. O. Smith's nine analysts are now forecasting revenues of US$3.09b in 2020. This would be a modest 3.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to swell 10% to US$2.44. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.09b and earnings per share (EPS) of US$2.53 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$49.29, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values A. O. Smith at US$57.00 per share, while the most bearish prices it at US$43.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

Further, we can compare these estimates to past performance, and see how A. O. Smith forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect A. O. Smith's revenue growth will slow down substantially, with revenues next year expected to grow 3.3%, compared to a historical growth rate of 6.0% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than A. O. Smith.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that A. O. Smith's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 2024, and you can see them free on our platform here.

We also provide an overview of the A. O. Smith Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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