A. O. Smith Corporation (AOS) AI Stock Analysis

• Market Cap: $9.73B
• Dividend Yield: 1.99%
• Average Volume (3M): 1.86M
• Price to Earnings (P/E): 19.1
• Beta (1Y): 0.81
• Revenue Growth: -1.60%
• EPS Growth: -7.12%
• Country: US
• Employees: 12,700
• Sector: Industrials
• Sector Strength: 89
• Industry: Industrial - Machinery
• EPS (TTM): 0.95
• Shares Outstanding: 116,238,976
• 10 Day Avg. Volume: 1,211,562
• 30 Day Avg. Volume: 1,864,955
• PEG Ratio: -12.62
• Price to Book (P/B): 4.88
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 21.93
• Enterprise Value/Market Cap: 0.93
• Enterprise Value/Revenue: 0.59
• Enterprise Value/Gross Profit: 6.25
• Enterprise Value/Ebitda: 2.82
• 1Y Price Target: $73.29
• Price Target Upside: 4.00% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

• Rating: 69 Neutral
• Price Target: $74.00 ▲(5.01%Upside)

A. O. Smith's overall stock score reflects strong financial health, with effective cost management and low leverage being key strengths. However, technical indicators suggest caution, and valuation metrics point to a fairly valued stock. Mixed earnings call sentiments, including challenges in some market segments and tariff uncertainties, weigh on the score.

Positive Factors

Commercial Water Heater Shipments

Total shipments of commercial water heaters increased 22.3% month over month and increased 0.8% year over year.

North American Sales Performance

A.O. Smith's North American sales are predicted to be up 1.8% year over year, which is above consensus for the North American Segment.

Negative Factors

Heating and Cooling Equipment Shipments

Recent U.S. heating and cooling equipment shipment data showed that total shipments of residential water heaters decreased 11.3% month over month and decreased 8.1% year over year.

Residential Water Heater Shipments

Total shipments of residential water heaters decreased 5.1% year over year.

A. O. Smith Corporation Business Overview & Revenue Model

Company Description

A. O. Smith Corporation manufactures and markets residential and commercial gas, heat pump and electric water heaters, boilers, tanks, and water treatment products in North America, China, Europe, and India. It operates through two segments, North America and Rest of World. The company offers water heaters for residences, restaurants, hotels and motels, office buildings, laundries, car washes, and small businesses; commercial boilers for hospitals, schools, hotels, and other large commercial buildings, as well as residential boilers for homes, apartments, and condominiums; and water treatment products comprising point-of-entry water softeners, well water solutions, and whole-home water filtration products, on-the-go filtration bottles, point-of-use carbon, and reverse osmosis products for residences, restaurants, hotels, and offices. It also provides food and beverage filtration products; expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, and related products and parts; and heat pumps, electric wall-hung, gas tankless, combi-boiler, heat pump and solar water heaters. The company offers its products primarily under the A. O. Smith, State, Lochinvar, and water softener brands. It distributes its products through independent wholesale plumbing distributors, as well as through retail channels consisting of hardware and home center chains, and manufacturer representative firms; and offers Aquasana branded products directly to consumers through e-commerce, as well as other online retailers. A. O. Smith Corporation was founded in 1874 and is headquartered in Milwaukee, Wisconsin.

How the Company Makes Money

A. O. Smith Corporation generates revenue primarily through the sale of water heating and water treatment products. The company's key revenue streams include the manufacture and distribution of residential and commercial water heaters, boilers, and water treatment systems. A. O. Smith sells its products through a network of wholesale distributors, retailers, and directly to consumers, catering to both new construction and replacement markets. The company also capitalizes on its international presence, particularly in high-growth regions like China, where rising urbanization and increased demand for clean water contribute significantly to its earnings. Strategic partnerships with retailers and investments in research and development further enhance A. O. Smith's ability to deliver innovative and efficient products, thus driving sales and profitability.

A. O. Smith Corporation Financial Statement Overview

Summary

A. O. Smith Corporation exhibits strong financial health with stable profitability, efficient operations, and low leverage. Despite challenges in revenue growth, the company maintains solid margins and cash flow metrics, ensuring resilience in the industrial machinery sector. The balance sheet's low debt levels and strong equity position further reinforce financial stability.

Income Statement

A. O. Smith Corporation demonstrates strong profitability with consistent gross and net profit margins over the years. The TTM (Trailing-Twelve-Months) gross profit margin stands at approximately 38.0%, and the net profit margin is 13.7%. Despite a slight decline in revenue from the previous year, the company maintains solid EBIT and EBITDA margins of 18.6% and 19.6% respectively, reflecting efficient cost control and operational performance.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.14, highlighting low leverage and financial stability. The equity ratio stands at about 64.3%, indicating a solid equity base. Return on equity (ROE) is robust at 24.9%, showcasing efficient use of shareholder funds to generate profits.

Cash Flow

Cash flow management is strong with a positive free cash flow and a free cash flow to net income ratio of approximately 0.78. However, there is a decline in free cash flow growth compared to previous years. The operating cash flow to net income ratio is healthy at 0.98, indicating effective cash conversion from earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.80B	3.82B	3.85B	3.75B	3.54B	2.90B
Gross Profit	1.45B	1.46B	1.48B	1.33B	1.31B	1.11B
EBITDA	768.80M	786.50M	823.80M	310.00M	707.80M	531.20M
Net Income	522.60M	533.60M	556.60M	235.70M	487.10M	344.90M
Balance Sheet
Total Assets	3.27B	3.24B	3.21B	3.33B	3.47B	3.16B
Cash, Cash Equivalents and Short-Term Investments	200.20M	276.10M	363.40M	481.80M	631.40M	689.60M
Total Debt	295.00M	216.70M	155.20M	366.90M	219.00M	147.60M
Total Liabilities	1.41B	1.36B	1.37B	1.58B	1.64B	1.31B
Stockholders Equity	1.86B	1.88B	1.84B	1.75B	1.83B	1.85B
Cash Flow
Free Cash Flow	406.60M	473.80M	597.70M	321.10M	566.00M	505.30M
Operating Cash Flow	513.90M	581.80M	670.30M	391.40M	641.10M	562.10M
Investing Cash Flow	-206.70M	-267.10M	-24.10M	8.10M	-349.90M	11.80M
Financing Cash Flow	-382.90M	-408.40M	-684.70M	-430.80M	-421.00M	-374.80M

A. O. Smith Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 70.47
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AOS, the sentiment is Positive. The current price of 70.47 is above the 20-day moving average (MA) of 65.86, above the 50-day MA of 66.58, and above the 200-day MA of 69.73, indicating a bullish trend. The MACD of 1.05 indicates Negative momentum. The RSI at 70.97 is Negative, neither overbought nor oversold. The STOCH value of 89.47 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AOS.

A. O. Smith Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WTS	79 Outperform	$8.49B	29.13	17.61%	0.82%	3.89%	8.17%
PNR	78 Outperform	$17.40B	27.28	18.59%	0.95%	-0.42%	3.23%
SPXC	78 Outperform	$7.96B	39.95	15.24%	―	10.78%	30.05%
IEX	76 Outperform	$13.93B	29.37	12.73%	1.54%	1.66%	-17.18%
CR	72 Outperform	$10.99B	36.20	18.82%	0.48%	6.65%	39.13%
AOS	69 Neutral	$9.73B	19.15	27.97%	1.99%	-1.60%	-7.12%
Sector *	65 Neutral	$10.75B	15.72	5.20%	1.90%	3.09%	-27.42%

A. O. Smith Corporation Corporate Events

A. O. Smith Announces Leadership Transition Effective July 2025

On April 25, 2025, A. O. Smith Corporation announced a leadership transition effective July 1, 2025, with Kevin J. Wheeler moving from Chairman and CEO to Executive Chairman, and Stephen M. Shafer, the current President and COO, being appointed as the new CEO. This change marks a significant shift in the company’s leadership as Shafer, who joined A. O. Smith in March 2024, will be responsible for global operations and strategy development. Under Wheeler’s leadership, the company experienced substantial growth, including key acquisitions and navigating challenges during the COVID-19 pandemic.