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On Friday, William Blair analysts remained bullish on AAON Inc (NASDAQ:AAON), maintaining their Outperform rating despite lowering their first-half 2025 earnings estimates. The revision reflects anticipated one-time plant start-up costs in Longview, Texas, and Memphis, Tennessee. Analysts at the firm adjusted their 2025 earnings per share (EPS) forecast to $3.04 from the previous $3.20, noting that the consensus average estimate stands at $2.94. According to InvestingPro data, six analysts have recently revised their earnings estimates downward, though the stock maintains a solid overall financial health score of "GREAT" with particularly strong profitability metrics.
The report highlighted that the second quarter is expected to bear the brunt of these one-time costs as the Memphis facility begins operations. However, the analysts emphasized AAON’s promising growth trajectory, stating, "AAON is entering the best growth cycle in the company’s history." They underscored AAON’s dominance in the market for liquid cooling solutions and the company’s substantial investments to expand its production capabilities. This optimism is supported by the company’s impressive 22% revenue CAGR over the past five years, though InvestingPro analysis suggests the stock is currently trading above its Fair Value, with a P/E ratio of 47x.
The analysts also provided projections for AAON’s data center sales, conservatively estimating revenues of $500 million in 2025. They further suggested that sales could reach $600 million if production scales as anticipated. This optimistic outlook is based on the company’s performance and strategic investments, which are expected to generate significant returns in the coming years. Recent financial data from InvestingPro shows the company’s strong foundation, with a healthy current ratio of 3.06 and minimal debt levels. For deeper insights into AAON’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In their analysis, William Blair analysts pointed out the importance of looking beyond the "noisy start to 2025," focusing instead on the potential for an EPS of $6.00-$7.00 in 2027. This long-term perspective highlights the firm’s confidence in AAON’s strategic direction and market position. The analysts’ comments suggest they believe that investors will overlook the temporary costs associated with the plant startups, focusing on the company’s growth potential, which is reflected in its strong return on equity of 26% and robust gross profit margin of 35.65%.
In other recent news, AAON, Inc. announced the appointment of Matt J. Tobolski as its new Chief Executive Officer, effective May 13, 2025. Current CEO Gary D. Fields will transition to a special advisor role while remaining on the board. This leadership change comes as AAON focuses on data center cooling technologies, leveraging Tobolski’s experience from his tenure at BASX Solutions. Additionally, AAON has secured an $80 million term loan to expand its Memphis plant, with the funds earmarked for constructing and outfitting the facility. This financial arrangement was made with a consortium of lenders, including Bank of Oklahoma and Wells Fargo (NYSE:WFC) Bank. The new loan will mature on December 16, 2029, with monthly principal payments required over 60 months. The expansion aligns with AAON’s strategy to enhance its manufacturing capabilities and meet increasing product demand. These developments are part of AAON’s broader efforts to bolster production efficiency and ensure long-term success.
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