A.O. Smith Needs More Than China to Grow
China looms large for water heater maker A.O. Smith (NYSE: AOS). It's a big reason for the company's laggard performance of late, with the stock up just 14% over the past three years compared to a roughly 45% gain for the S&P 500 Index. But it's important to step back and look at the company from a greater distance before passing judgement, because right now Wall Street appears to be focusing a little too much on just one country when there's so much more to understand here.
It would be impossible to suggest that China isn't important to A.O. Smith's business. Roughly 34% of the company's top line comes from that one country alone. It has been a huge growth engine, too, with a compound annual sales growth rate of 17% over the past decade. When there are problems in China, investors should expect them to hit A.O. Smith hard.
That said, this is the first time that there's been a notable problem in China, helped along by both the country's slowing growth and the very public trade spat with the United States.
Source Fool.com
