AAON Soars 24% on Record Q3 and Higher Guidance, Despite Restatement

AAON (AAON) had one of the biggest earnings-day moves of the week. The HVAC maker's shares jumped roughly a quarter on Tuesday after record third-quarter results and a sharply higher full-year forecast.

The headline number: net sales rose 84.1% to $707.4 million. FactSet analysts had expected $601.2 million, according to CNBC's market movers coverage.

Adjusted earnings came in at 83 cents a share against a 57-cent forecast. Operating income more than doubled to $100 million.

Management now expects 2026 sales growth of 72% to 75%, up from the 55% to 60% it guided to earlier. That's a big raise this late in the year, and it reflects how fast the backlog is converting to revenue.

Growth came from both brands. AAON-branded sales rose 20% to a record $310 million, while BASX-branded sales, which serve data centers, climbed 218% to a record $397 million, per GuruFocus's earnings call summary.

Total backlog is about $1.9 billion, up 40% from a year ago. National account orders for the AAON brand rose nearly 70%.

"We delivered record net sales, more than doubled operating income and diluted EPS, improved gross margin 60 basis points sequentially, generated strong cash flow and raised full-year outlook." — Matt Tobolski, President and CEO, The Aaon Group

Cash flow is the quieter story. AAON generated $147 million in operating cash flow over the first nine months, versus a $19 million cash drain a year earlier, and the quarter was its first free-cash-flow-positive one in two years.

The balance sheet looks better for it. Debt is $387 million and the leverage ratio improved to 1.0 from 1.8 at the start of the year, which gives the company room to keep funding capacity expansion.

Orders look healthy heading into the fourth quarter. CEO Tobolski told analysts that momentum strengthened from the third quarter into the fourth, with bookings expected to be at or above last year's Q4 level.

Now the catch. AAON restated its first-half 2026 results after finding accounting errors, which raised revenue by $10.7 million and earnings by 9 cents a share. It also concluded that a material weakness existed in its internal controls over financial reporting.

The restatement moved the numbers up rather than down, and the market clearly looked past it. But a material weakness is the kind of thing that deserves a second look, and it can take several quarters to remediate.

Margins are the other soft spot. Gross margin was 26.7%, which is up 60 basis points from the second quarter but down 110 basis points from a year ago. The faster-growing, lower-margin BASX business is dragging the mix.

Management expects fourth-quarter gross margin to dip slightly from the third because of holiday production days and inventory counts. The Oklahoma segment's 32.8% adjusted margin is also still short of the company's mid-to-high-30s target, and there's no formal 2027 guidance yet.

The stock has been a wild ride. StockStory noted that AAON has made 34 moves of more than 5% in the past year, and that at about $77 a share it still trades roughly 48% below its June high of $148.25.

The other thing to track is capacity. Management has said the BASX ramp will be intentional and gradual, which protects quality and margins but could cap how much of that data center demand AAON can capture in the near term.

For investors, that gap cuts both ways. It shows how much optimism has been wrung out of the name, and how quickly it can return on a good print.

What to watch next: whether gross margin stabilizes as BASX scales, how quickly the company cleans up its controls, and whether Q4 bookings hold at or above last year's level, as management said they should.

If you're chasing a 24% pop, be careful about entry. A pullback toward the pre-earnings range would offer a better risk-reward than buying the gap.

Bottom line: AAON is executing, but the accounting cleanup and margin mix mean the story isn't finished.