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Aaon Inc (AAON)
:AAON

Aaon (AAON) AI Stock Analysis

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Aaon

(NASDAQ:AAON)

Rating:67Neutral
Price Target:
$85.00
â–²(12.93%Upside)
AAON's strong financial performance and strategic corporate events are key strengths, while technical analysis and valuation indicate caution. The mixed outlook from the earnings call further tempers the overall score.
Positive Factors
Backlog and Future Performance
Record backlog surpassing $1 billion gives confidence in the company's future performance.
Product Innovation
AAON's new Alpha Class Extreme heat pump is highly attractive to national accounts with sustainability targets due to being the only heat pump in the market fully efficient down.
Sales Growth
BASX-branded sales growth of 375% significantly exceeded expectations, indicating strong product performance.
Negative Factors
ERP Implementation Issues
Shares took a leg lower after the second quarter was guided down 'slightly' due to issues with a new ERP rollout.
Gross Margin Concerns
Shares closed down 16% following disappointing midterm outlooks for both gross margin and top-line growth.
Production Challenges
R454B compressor shortages caused production to slow, impacting operations.

Aaon (AAON) vs. SPDR S&P 500 ETF (SPY)

Aaon Business Overview & Revenue Model

Company DescriptionAAON, 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 MoneyAaon generates revenue primarily through the sale of its HVAC systems and related services. The company's business model is centered around manufacturing and distributing customized HVAC equipment to meet the specific needs of its clients across different industries. Key revenue streams include direct sales to end-users, sales through a network of distributors, and after-market services such as maintenance and repair. Aaon's focus on energy-efficient and high-performance products allows it to command a premium pricing strategy, contributing positively to its earnings. The company also benefits from strategic partnerships with suppliers and a strong emphasis on research and development, which enable it to stay ahead of industry trends and maintain a competitive edge.

Aaon Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: -17.44%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed performance for AAON, Inc. Significant sales growth and a record backlog, driven by BASX-branded equipment, are notable positives. However, these are offset by challenges in the AAON-branded segment, including declining sales, gross margin contraction, and supply chain issues related to refrigerant transition. Despite operational efficiencies and new product introductions, the financial strain from increased SG&A expenses and lower EPS suggests a cautious outlook.
Q1-2025 Updates
Positive Updates
Record Sales Growth
Total net sales grew year-over-year 22.9% to $322.1 million, driven by a 374.8% increase in BASX-branded equipment sales.
Strong Backlog
Total backlog finished the quarter at a record level of $1 billion, up year-over-year 83.9% and up quarter-over-quarter 18.4%.
Operational Efficiency in BASX and AAON Coil Products
Gross margin at the BASX and AAON Coil Products segments expanded by 350 and 100 basis points, respectively, due to operational efficiency improvements.
Positive Booking Trends
Bookings of both AAON-branded and BASX-branded equipment were robust, with backlog of AAON-branded equipment up quarter-over-quarter 23.4%.
Introduction of New Products
Introduction of the next generation Alpha Class series heat pump, operable down to negative 20 degrees Fahrenheit, meeting DOE's commercial heat pump challenge two years in advance.
Negative Updates
Decline in AAON-branded Equipment Sales
Sales of AAON-branded equipment declined year-over-year 19.1%, largely due to production constraints and weak bookings in the fourth quarter.
Gross Margin Contraction
Total gross margin contracted 840 basis points year-over-year due to weak production volume of AAON-branded rooftop units.
Challenges with Refrigerant Transition
Supply chain issues with components associated with the new R454B refrigerant impacted production, leading to lower production volumes.
Increased SG&A Expenses
Selling, general and administrative expenses increased 13.3% to $51.3 million.
Lower Earnings Per Share
Diluted earnings per share was $0.35, down 23.9% from a year ago, reflecting decreased production volumes and lower profits of AAON-branded equipment.
Company Guidance
During the first quarter of 2025, AAON, Incorporated reported strong financial performance with a 22.9% year-over-year increase in net sales, reaching $322.1 million. This growth was primarily driven by a remarkable 374.8% surge in BASX-branded equipment sales, while AAON-branded equipment sales declined by 19.1%. The total backlog reached a record $1 billion, up 83.9% year-over-year. Gross profit decreased by 6.4% to $86.4 million, with gross margins contracting due to lower production volumes of AAON-branded rooftop units. However, segment margins improved in the AAON Coil Products and BASX segments, with increases of 100 and 350 basis points, respectively. Diluted earnings per share stood at $0.35, down 23.9% from the previous year, with an effective tax rate of 9.8%. The company maintained its full-year outlook, anticipating mid- to high-teens sales growth and capital expenditures of $220 million.

Aaon Financial Statement Overview

Summary
AAON exhibits strong revenue growth and profitability metrics with a robust balance sheet showing low leverage. However, cash flow management needs improvement with negative free cash flow in TTM.
Income Statement
85
Very Positive
AAON has demonstrated strong revenue growth with a 42.6% increase from 2021 to 2025. The company maintains solid profitability with a consistent gross profit margin around 31%, and a net profit margin improving to 12.6% in TTM. Despite a slight decline in EBIT margin to 15.6% from 18.2% in 2023, the company's margins remain strong in the industry.
Balance Sheet
78
Positive
AAON exhibits a stable financial position with a low debt-to-equity ratio of 0.02 in TTM, indicating minimal leverage risk. The return on equity is solid at 19.5%, reflecting efficient use of shareholders' funds. However, the equity ratio decreased to 62.7% in TTM, suggesting a slight increase in liabilities relative to assets.
Cash Flow
70
Positive
The company faces challenges in cash flow management, with negative free cash flow of -$164.995 million in TTM. The operating cash flow to net income ratio dropped significantly, indicating potential issues in cash conversion. Despite these challenges, the overall cash flow remains positive due to strong operating cash flow historically.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.26B1.20B1.17B888.79M534.52M514.55M
Gross Profit391.23M397.11M399.02M237.57M137.83M155.85M
EBITDA266.18M272.42M274.79M162.59M99.73M120.99M
Net Income158.84M168.56M177.62M100.38M58.76M79.01M
Balance Sheet
Total Assets1.30B1.18B941.44M813.90M650.18M449.01M
Cash, Cash Equivalents and Short-Term Investments994.00K14.00K287.00K5.45M2.86M79.03M
Total Debt267.83M170.96M50.55M78.25M41.58M202.00K
Total Liabilities484.34M350.65M206.21M253.19M184.01M98.14M
Stockholders Equity815.85M824.58M735.22M560.71M466.17M350.87M
Cash Flow
Free Cash Flow-165.00M-3.13M49.40M-14.71M5.82M61.01M
Operating Cash Flow56.14M192.53M158.90M61.32M61.18M128.81M
Investing Cash Flow-224.75M-213.07M-109.31M-76.21M-158.72M-61.27M
Financing Cash Flow107.82M18.03M-46.51M17.36M18.73M-29.63M

Aaon Technical Analysis

Technical Analysis Sentiment
Negative
Last Price75.27
Price Trends
50DMA
89.34
Negative
100DMA
88.36
Negative
200DMA
104.05
Negative
Market Momentum
MACD
-4.95
Negative
RSI
35.49
Neutral
STOCH
73.52
Neutral
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 75.27 is below the 20-day moving average (MA) of 78.06, below the 50-day MA of 89.34, and below the 200-day MA of 104.05, indicating a bearish trend. The MACD of -4.95 indicates Negative momentum. The RSI at 35.49 is Neutral, neither overbought nor oversold. The STOCH value of 73.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AAON.

Aaon Risk Analysis

Aaon disclosed 22 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 (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TTTT
81
Outperform
$96.50B36.0038.45%0.87%11.43%28.49%
81
Outperform
$64.52B17.2725.69%1.20%0.14%202.13%
LILII
75
Outperform
$21.37B26.84131.48%0.86%7.78%30.10%
JCJCI
73
Outperform
$68.88B27.9114.92%1.41%-8.39%51.56%
OCOC
72
Outperform
$12.38B52.2611.93%1.90%16.16%-77.11%
67
Neutral
$6.12B39.5519.85%0.53%8.24%-11.66%
65
Neutral
$10.69B15.755.51%1.90%2.72%-26.43%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AAON
Aaon
75.27
-11.44
-13.19%
TT
Trane Technologies
432.71
104.14
31.69%
JCI
Johnson Controls
105.07
39.45
60.12%
LII
Lennox International
602.10
62.01
11.48%
OC
Owens Corning
145.57
-17.54
-10.75%
CARR
Carrier Global
75.26
12.40
19.73%

Aaon Corporate Events

Business Operations and Strategy
AAON Hosts Investor Day at NASDAQ MarketSite
Positive
Jun 10, 2025

On June 10, 2025, AAON will host an Investor Day at NASDAQ MarketSite in New York, featuring presentations from the CEO, CFO, and other executives. The event aims to provide insights into AAON’s strategic direction, highlighting its focus on innovation, customization, and automation in the HVAC industry. The company is transitioning to a brand-based structure to enhance efficiency and better leverage its manufacturing capabilities. This reorganization is expected to improve investor understanding and drive sustainable growth, particularly in the rapidly expanding data center market.

The most recent analyst rating on (AAON) stock is a Buy with a $110.00 price target. To see the full list of analyst forecasts on Aaon stock, see the AAON Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
AAON Expands Loan Agreement to Boost Flexibility
Positive
May 30, 2025

On May 29, 2025, AAON, Inc. and its subsidiaries entered into a Fifth Amendment to their existing Loan Agreement with several lenders, increasing the revolving commitment from $200 million to $500 million. This amendment, which extends the maturity date to May 27, 2030, aims to enhance the company’s financial flexibility by refinancing existing term loans and adjusting the terms of their credit facilities, potentially strengthening AAON’s market position and operational capabilities.

The most recent analyst rating on (AAON) stock is a Buy with a $110.00 price target. To see the full list of analyst forecasts on Aaon stock, see the AAON Stock Forecast page.

Executive/Board ChangesShareholder MeetingsDividends
AAON Announces Board Expansion and Dividend Declaration
Positive
May 16, 2025

On May 13, 2025, AAON, Inc. held its Annual Meeting where stockholders elected board members, ratified Grant Thornton, LLP as the independent public accounting firm for 2025, and approved executive compensation. The company also announced an increase in its Board of Directors from eight to nine members, appointing CEO Matt J. Tobolski as a new director. Additionally, AAON declared a quarterly cash dividend of $0.10 per share, payable on June 27, 2025, to stockholders of record as of June 6, 2025.

The most recent analyst rating on (AAON) stock is a Buy with a $110.00 price target. To see the full list of analyst forecasts on Aaon stock, see the AAON Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
AAON Reports Strong Q1 2025 Results Amid Challenges
Positive
May 1, 2025

On April 30, 2025, AAON, Inc. announced its first quarter results for 2025, highlighting a strong performance with a 22.9% increase in net sales compared to the previous year. The company reported significant growth in its BASX-branded products, with net sales up 374.8% year-over-year, driven by demand for data center equipment. However, AAON-branded products faced challenges due to supply chain issues with R454B refrigerant components, resulting in a 23.0% decline in net sales for the Oklahoma segment. Despite these challenges, the company achieved a record total backlog of $1.0 billion, reflecting strong bookings for both BASX and AAON-branded equipment.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 11, 2025