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Aaon Inc (AAON)
NASDAQ:AAON

Aaon (AAON) AI Stock Analysis

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Aaon

(NASDAQ:AAON)

Rating:71Outperform
Price Target:
$118.00
▲( 18.07% Upside)
AAON's strong financial fundamentals and strategic investments are tempered by technical weaknesses and valuation concerns. While the company exhibits robust revenue growth and effective balance sheet management, overbought technical indicators and high P/E ratio warrant caution. Earnings call insights suggest growth potential, albeit with notable operational challenges.
Positive Factors
Backlog and Future Performance
Record backlog surpassing $1 billion gives confidence in the company's future performance.
Product Performance
BASX-branded sales growth of 375% significantly exceeded expectations, indicating strong product performance.
Negative Factors
Production Issues
R454B compressor shortages caused production to slow, impacting operations.
Sales and Margins
Oklahoma sales and margins were well below expectations due to customer 'pushouts' related to the refrigerant change.

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 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 has demonstrated strong revenue growth with a 42.6% increase from 2021 to 2025, solid profitability, and a stable financial position with low leverage. However, challenges in cash flow management and slight declines in certain profitability margins are noted.
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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.26B1.20B1.17B888.79M534.52M514.55M
Gross Profit
391.23M397.11M399.02M237.57M137.83M155.85M
EBIT
197.26M209.12M227.49M126.76M69.25M101.84M
EBITDA
197.26M209.12M241.76M127.48M69.39M120.99M
Net Income Common Stockholders
158.84M168.56M177.62M100.38M58.76M79.01M
Balance SheetCash, Cash Equivalents and Short-Term Investments
994.00K14.00K287.00K5.45M2.86M79.03M
Total Assets
1.30B1.18B941.44M813.90M650.18M449.01M
Total Debt
267.83M170.96M50.55M78.25M41.58M202.00K
Net Debt
266.84M170.95M50.26M72.80M38.72M-78.82M
Total Liabilities
484.34M350.65M206.21M253.19M184.01M98.14M
Stockholders Equity
815.85M824.58M735.22M560.71M466.17M350.87M
Cash FlowFree Cash Flow
-165.00M-3.13M49.40M-14.71M5.82M61.01M
Operating Cash Flow
56.14M192.53M158.90M61.32M61.18M128.81M
Investing Cash Flow
-224.75M-213.07M-109.31M-76.21M-158.72M-61.27M
Financing Cash Flow
107.82M18.03M-46.51M17.36M18.73M-29.63M

Aaon Technical Analysis

Technical Analysis Sentiment
Positive
Last Price99.94
Price Trends
50DMA
87.88
Positive
100DMA
98.85
Positive
200DMA
105.08
Negative
Market Momentum
MACD
4.52
Positive
RSI
55.99
Neutral
STOCH
38.73
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAON, the sentiment is Positive. The current price of 99.94 is above the 20-day moving average (MA) of 99.12, above the 50-day MA of 87.88, and below the 200-day MA of 105.08, indicating a neutral trend. The MACD of 4.52 indicates Positive momentum. The RSI at 55.99 is Neutral, neither overbought nor oversold. The STOCH value of 38.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 2 New Risks
1.
Complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations. Q4, 2024
2.
Changes in U.S. or foreign trade policies, including additional tariffs or global trade conflicts, could increase the cost of our products, which could adversely impact the competitiveness of our products. Q4, 2024

Aaon Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TTTT
76
Outperform
$95.85B35.7638.45%0.80%11.43%28.49%
JCJCI
74
Outperform
$64.26B26.0414.92%1.52%-8.39%51.56%
LILII
74
Outperform
$21.19B26.61131.48%0.81%7.78%30.10%
71
Outperform
$8.51B54.9219.85%0.34%8.24%-11.66%
OCOC
71
Outperform
$12.01B50.6811.93%1.91%16.16%-77.11%
71
Outperform
$64.26B17.2025.69%1.10%0.14%202.13%
64
Neutral
$4.39B11.815.17%249.38%3.98%-12.17%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AAON
Aaon
99.94
23.97
31.55%
TT
Trane Technologies
424.26
94.61
28.70%
JCI
Johnson Controls
97.93
26.08
36.30%
LII
Lennox International
574.60
86.72
17.77%
OC
Owens Corning
135.14
-38.83
-22.32%
CARR
Carrier Global
71.77
7.99
12.53%

Aaon Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 9.50%|
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 Corporate Events

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.

Business Operations and Strategy
AAON Executives to Present at Sidoti Conference
Neutral
Mar 17, 2025

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.

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.