Jehoshaphat Research short Aaon, sees over 30% downside to earnings

Jehoshaphat Research is short Aaon (AAON), “a manufacturer of HVAC products with easy to borrow stock and universal Buy ratings from the Street.” In a recently published report, it says, “AAON’s management would like investors to believe that the company’s new data center cooling projects, the ones driving all its revenue growth, have gross margins in line with its corporate average. Based on our analysis, these projects have a far lower gross margin than that. Yet the Street is forecasting both rapid revenue growth in this area, and massive gross margin expansion at the total company level. Even if AAON were to meet its revenue growth expectations, it will miss on gross margins due to this mix shift alone.” “We are short AAON and see greater than 30% downside to earnings versus consensus, as the revenue and margin catalysts play out. We further see a potential accounting restatement that should reset inflated revenues to something more accurate,” Jehoshaphat adds.