What Happened?

Shares of heating and cooling solutions company AAON (NASDAQ: AAON) fell 15.3% in the morning session after the company reported disappointing second-quarter 2025 results that missed analyst expectations for revenue and profit, and provided a weak outlook for the upcoming quarter. The heating and cooling solutions company reported revenue of $311.6 million and adjusted earnings of $0.22 per share, falling short of Wall Street's estimates of $325 million and $0.33 per share, respectively. Furthermore, its revenue guidance for the third quarter came in 14.3% below analyst expectations, signaling continued headwinds. Profitability was a major concern, as the company’s operating margin collapsed to 7.6% from 21.7% in the same quarter last year. The company also burned through $57.62 million in free cash flow, a sharp reversal from a positive figure a year ago. Overall, the combination of missed expectations, weak guidance, and sharply deteriorating profitability led to a negative reaction from investors.

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What Is The Market Telling Us

AAON’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for AAON and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 25 days ago when the stock gained 5.5% as the second quarter (2025) earnings season got off to a strong start. Quarterly earnings reports released during the week exceeded Wall Street's expectations, fueling investor confidence. Around 50 S&P 500 components reported, with 88% of those exceeding analysts' expectations, FactSet data revealed. Investors were also encouraged by several positive reports that painted a picture of a resilient consumer. One key report revealed that shoppers increased their spending at U.S. retailers more than economists had anticipated. Precisely, retail sales increased 0.6% from May, surpassing the 0.2% estimate. This robust consumer spending is a crucial pillar supporting the economy. Adding to the positive sentiment, the latest data on unemployment claims showed a decrease in the number of workers applying for benefits, signaling that layoffs remain limited and the job market is steady. This combination of strong earnings reports, retail sales, and a solid labor market suggests the economy is navigating challenges successfully.

AAON is down 39.5% since the beginning of the year, and at $71.35 per share, it is trading 49.3% below its 52-week high of $140.75 from November 2024. Investors who bought $1,000 worth of AAON’s shares 5 years ago would now be looking at an investment worth $1,784.

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