Aaon (AAON) AI Stock Analysis

• Market Cap: $6.54B
• Dividend Yield: 0.5%
• Average Volume (3M): 1.12M
• Price to Earnings (P/E): 39.9
• Beta (1Y): 1.44
• Revenue Growth: 2.75%
• EPS Growth: -5.43%
• Country: US
• Employees: 4,812
• Sector: Industrials
• Sector Strength: 70
• Industry: Construction
• EPS (TTM): 2.02
• Shares Outstanding: 81,317,580
• 10 Day Avg. Volume: 839,462
• 30 Day Avg. Volume: 1,121,376
• PEG Ratio: 3.82
• Price to Book (P/B): N/A
• Price to Sales (P/S): 5.41
• Price to Cash Flow (P/CF): 1922.90
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $117.00
• Price Target Upside: 39.02% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

AAON's stock score reflects a robust financial foundation with strong revenue growth and minimal leverage, but is offset by bearish technical indicators and valuation concerns. Although strategic investments position the company for long-term growth, near-term operational challenges and profitability issues present risks.

Positive Factors

Growth Potential

AAON is entering the best growth cycle in the company’s history.

Technological Advantage

AAON won the $200 million liquid cooling order by designing a more efficient liquid-to-air system with a smaller footprint.

Valuation

Shares are compelling with valuation at 20 times NTM EBITDA, versus the 22-times average the past five years.

Negative Factors

Operational Costs

One-time plant start-up costs in Longview, Texas, and Memphis, Tennessee are affecting estimates.

Sales and Margins

The main issue is core rooftop sales and gross margins came in below for the fourth quarter and first quarter 2025.

Sales Performance

Shares are down 15% with fourth-quarter EPS missing the Street by 40% and the 2025 guide below.

Aaon Business Overview & Revenue Model

Company Description

AAON, Inc., together with its subsidiaries, engages in engineering, manufacturing, marketing, and selling air conditioning and heating equipment in the United States and Canada. The company operates through three segments: AAON Oklahoma, AAON Coil Products, and BasX. It offers rooftop units, data center cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. The company markets and sells its products to retail, manufacturing, educational, lodging, supermarket, data centers, medical and pharmaceutical, and other commercial industries. It sells its products through a network of independent manufacturer representative organizations and internal sales force. The company was incorporated in 1987 and is based in Tulsa, Oklahoma.

How the Company Makes Money

Aaon 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

Despite strong revenue and profit growth with efficient equity management and low leverage, challenges in converting earnings into free cash flow due to high capital expenditures slightly dampen the overall financial performance.

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.

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.

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.

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
230.04M	241.76M	127.48M	69.39M	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

• Technical Analysis Sentiment: Neutral
• Last Price: 84.16
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAON, the sentiment is Neutral. The current price of 84.16 is above the 20-day moving average (MA) of 79.82, below the 50-day MA of 90.76, and below the 200-day MA of 104.06, indicating a neutral trend. The MACD of -4.71 indicates Negative momentum. The RSI at 38.52 is Neutral, neither overbought nor oversold. The STOCH value of 31.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AAON.

Aaon Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JCI	76 Outperform	$50.32B	29.11	9.80%	1.94%	-4.53%	-14.72%
OC	71 Outperform	$11.50B	18.25	12.63%	1.92%	13.41%	-44.36%
CARR	70 Outperform	$51.02B	125.80	27.44%	1.35%	8.62%	163.53%
LII	69 Neutral	$19.52B	24.41	142.12%	0.83%	7.21%	36.45%
TT	68 Neutral	$75.88B	30.09	35.88%	1.02%	12.22%	28.13%
Sector *	62 Neutral	$7.50B	12.89	3.19%	3.38%	3.64%	-14.27%
AAON	61 Neutral	$6.54B	39.90	21.61%	0.50%	2.75%	-5.43%

Aaon Corporate Events

AAON Executives to Present at Sidoti Conference

On March 17, 2025, AAON announced that key executives, including CEO Gary Fields and CFO Rebecca Thompson, will present at the Sidoti Spring 2025 Small-Cap Conference on March 20, 2025. The presentation, which will be held virtually, is expected to provide insights into AAON’s strategic direction and market positioning, potentially impacting stakeholders’ perception of the company’s future performance.

AAON Reports 2024 Financial Results Amid Challenges

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.