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Aaon Inc (AAON)
NASDAQ:AAON
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Aaon
(NASDAQ:AAON)64Neutral
Positive Factors
Growth Prospects
AAON is entering the best growth cycle in the company’s history, with significant investments in market leadership and capacity.
Market Position
AAON’s rooftop units are in the best competitive position in 15 years, offering premium features and better total cost of ownership compared to peers.
Negative Factors
Financial Performance
Shares are down 15% with fourth-quarter EPS missing the Street by 40% and the 2025 guide below expectations.
Aaon (AAON) vs. S&P 500 (SPY)
Market Cap
$6.14B
Dividend Yield0.43%
Average Volume (3M)948.12K
Price to Earnings (P/E)37.3
Beta (1Y)1.76
Revenue Growth2.75%
EPS Growth-5.43%
CountryUS
Employees3,856
SectorIndustrials
Sector Strength66
IndustryConstruction
Share Statistics
EPS (TTM)2.02
Shares Outstanding81,597,290
10 Day Avg. Volume1,333,148
30 Day Avg. Volume948,119
Financial Highlights & Ratios
PEG Ratio3.82
Price to Book (P/B)N/A
Price to Sales (P/S)5.00
Price to Cash Flow (P/CF)1774.70
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$117.00Price Target Upside42.79% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Aaon Business Overview & Revenue Model
Company DescriptionAAON, Inc. engages in the engineering, manufacturing, marketing and sale of air conditioning and heating equipment. It operates through the following segments: Units, Parts-External, Parts-Internal, and Other. Its products include air handling units, self contained units, packaged rooftop units, geothermal heat units, controls, and coils. The company was founded by Norman H. Asbjornson on August 18, 1987 and is headquartered in Tulsa, OK.
How the Company Makes MoneyAaon generates revenue primarily through the sale of its HVAC equipment to commercial and industrial clients. The company designs and manufactures a wide array of customized HVAC solutions, which are sold directly to end-users or through a network of distributors and independent sales representatives. Aaon's revenue streams are bolstered by its commitment to innovation and product differentiation, which allows it to offer energy-efficient and environmentally-friendly solutions that meet specific customer needs. Additionally, aftermarket services, including parts and maintenance support, contribute to the company's earnings, ensuring ongoing engagement with clients and extending the lifecycle of its products.
Aaon Financial Statement Overview
Summary
Aaon displays strong financial health with consistent revenue and profit growth, efficient equity management, and a conservative leverage approach. However, challenges exist in converting earnings into free cash flow due to high capital expenditures.Income Statement
Aaon has shown impressive revenue growth with a consistent increase year-over-year. The company achieved a gross profit margin of 33.1% and a net profit margin of 14.0% for the latest annual period, indicating strong profitability. EBIT and EBITDA margins are robust at 17.4% and 17.4%, respectively. The company has maintained an upward revenue trajectory with a 3% growth this year, showcasing resilience in its growth strategy.88
Very Positive
Balance Sheet
Aaon's balance sheet is solid with a low debt-to-equity ratio of 0.02, reflecting minimal leverage. The equity ratio stands at 70.2%, signifying a strong equity base. ROE is significant at 20.4%, indicating efficient use of shareholders' equity to generate profit. Overall, Aaon maintains a stable and healthy financial position with a conservative leverage approach, reducing potential financial risks.85
Very Positive
Cash Flow
The cash flow analysis reveals challenges in free cash flow growth, showing a decline when compared to previous periods. The operating cash flow to net income ratio is strong at 1.14, highlighting effective cash generation from operations. However, the free cash flow to net income ratio is negative, indicating a potential concern in cash availability for discretionary uses. Despite strong operational cash flows, high capital expenditures impact free cash flow negatively.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.20B | 1.17B | 888.79M | 534.52M | 514.55M | Gross Profit |
| 397.11M | 399.02M | 237.57M | 137.83M | 155.85M | EBIT |
| 209.12M | 227.49M | 126.76M | 69.25M | 101.84M | EBITDA |
| 209.12M | 274.79M | 162.59M | 99.73M | 120.99M | Net Income Common Stockholders |
| 168.56M | 177.62M | 100.38M | 58.76M | 79.01M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 14.00K | 287.00K | 5.45M | 2.86M | 79.03M | Total Assets |
| 1.18B | 941.44M | 813.90M | 650.18M | 449.01M | Total Debt |
| 16.00M | 50.55M | 78.25M | 41.58M | 202.00K | Net Debt |
| 15.99M | 50.26M | 72.80M | 38.72M | -78.82M | Total Liabilities |
| 350.65M | 206.21M | 253.19M | 184.01M | 98.14M | Stockholders Equity |
| 824.58M | 735.22M | 560.71M | 466.17M | 350.87M |
| Cash Flow | Free Cash Flow | |||
| -3.13M | 49.40M | -14.71M | 5.82M | 61.01M | Operating Cash Flow |
| 192.53M | 158.90M | 61.32M | 61.18M | 128.81M | Investing Cash Flow |
| -213.07M | -109.31M | -76.21M | -158.72M | -61.27M | Financing Cash Flow |
| 18.03M | -46.51M | 17.36M | 18.73M | -29.63M |
Aaon Technical Analysis
Negative
81.94
Price Trends
114.15
Negative
119.29
Negative
103.61
Negative
Market Momentum
-10.81
Positive
30.15
Neutral
14.89
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAON, the sentiment is Negative. The current price of 81.94 is below the 20-day moving average (MA) of 101.75, below the 50-day MA of 114.15, and below the 200-day MA of 103.61, indicating a bearish trend. The MACD of -10.81 indicates Positive momentum. The RSI at 30.15 is Neutral, neither overbought nor oversold. The STOCH value of 14.89 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AAON.
Aaon Risk Analysis
Aaon disclosed 21 risk factors in its most recent earnings report. Aaon reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Aaon Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $53.41B | 30.89 | 11.01% | 1.79% | -4.53% | -14.72% | |
75 Outperform | $20.39B | 25.42 | 94.91% | 0.78% | 7.21% | 36.45% | |
70 Outperform | $53.63B | 132.23 | 23.17% | 1.28% | 8.62% | 163.53% | |
68 Neutral | $76.98B | 30.53 | 0.05% | 0.97% | 12.22% | 28.13% | |
64 Neutral | $6.14B | 37.34 | 20.44% | 0.43% | 2.75% | -5.43% | |
62 Neutral | $32.83B | 39.55 | 8.24% | 0.10% | 5.22% | 8.01% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
AAON
Aaon
81.94
1.23
1.52%
TT
Trane Technologies
348.65
64.34
22.63%
JCI
Johnson Controls
82.22
22.95
38.72%
LII
Lennox International
588.07
116.83
24.79%
IR
Ingersoll Rand
84.43
-5.73
-6.36%
CARR
Carrier Global
64.87
7.84
13.75%
Aaon Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -19.68% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with strong bookings and backlog driven by the Basics brand and data center equipment. However, the call also highlighted significant challenges in the AAON Oklahoma segment, declining sales, and reduced profitability. The company's strategic investments and reorganization are positioned to support future growth, but current operational challenges and fiscal performance issues are notable concerns.Highlights
Record Bookings and Backlog
Bookings were up approximately 62%, with year-end backlog finishing up 70% to $867.1 million, primarily driven by data center equipment orders.
Basics Brand Success
Net sales of Basics branded equipment were up 35.1%, with data center equipment sales up approximately 85% and bookings up approximately 100%.
AAON Coil Products Segment Growth
The AAON Coil Products segment realized growth of 129.9% despite challenges in other segments.
Strong Strategic Position
The company is positioned for long-term growth with investments in new facilities and a strategic reorganization to support increased capacity.
Lowlights
Sales Decline in AAON Oklahoma Segment
AAON Oklahoma segment experienced a 16.1% decline in sales, largely due to the refrigerant transition and related production challenges.
Decreased Gross Profit
Gross profit decreased 30.5% to $77.6 million, with a margin reduction from 36.4% in 2023 to 26.1% in 2024.
Earnings Per Share Decline
Diluted earnings per share decreased 46.4% to $0.30 from $0.56, partly due to lower earnings and increased expenses.
Operational Challenges in Redmond Facility
The Basics segment faced operational inefficiencies due to demand exceeding capacity, impacting margins negatively.
Company Guidance
During the AAON, Inc. Fourth Quarter 2024 earnings conference call, the company provided guidance for 2025, anticipating sales growth in the mid to high teens with a gross margin similar to 2024. Specific challenges were addressed, such as the impacts of the refrigerant transition and operational inefficiencies, which affected gross profit margins that decreased to 26.1% from 36.4% the previous year. The call highlighted significant backlog growth, which finished 2024 up by 70%, driven by a large $200 million-plus order for data center equipment. The company expects a substantial portion of this backlog to convert to revenue in 2025, positioning them for accelerated growth. Capital expenditures are projected at approximately $220 million, with a focus on ramping up the new Memphis facility. Despite the challenges, AAON remains optimistic about the fundamentals of both its AAON and Basics brands, driven by strong demand in the data center market and innovations in heat pump technology.Aaon Corporate Events
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
AAON Reports 2024 Financial Results Amid Challenges
Neutral
Feb 27, 2025
On February 27, 2025, AAON announced its fourth quarter and full year 2024 financial results, highlighting a 2.9% decrease in net sales for the quarter compared to the previous year. Despite challenges such as an industry-regulated refrigerant transition and weakened nonresidential construction activity, the company saw significant growth in its BASX brand, which impacted the data center market with a new liquid cooling solution. The company’s total backlog increased by 70% from the end of 2023, and production capacity was expanded with new facilities in Texas and Tennessee. However, the AAON Oklahoma segment experienced a 16.1% decline in sales due to macroeconomic conditions and the refrigerant transition. The company also announced a $100 million share repurchase program, indicating confidence in its market position.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.