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

• Market Cap: $9.47B
• Dividend Yield: 2.03%
• Average Volume (3M): 1.45M
• Price to Earnings (P/E): 18.4
• Beta (1Y): 0.74
• Revenue Growth: -1.64%
• EPS Growth: -2.50%
• Country: US
• Employees: 12,700
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.94
• Shares Outstanding: 113,372,120
• 10 Day Avg. Volume: 1,376,290
• 30 Day Avg. Volume: 1,448,227
• PEG Ratio: -11.62
• Price to Book (P/B): 5.32
• Price to Sales (P/S): 2.63
• P/FCF Ratio: 21.16
• Enterprise Value/Market Cap: 1.10
• Enterprise Value/Revenue: 2.71
• Enterprise Value/Gross Profit: 7.04
• Enterprise Value/Ebitda: 13.22
• 1Y Price Target: $78.38
• Price Target Upside: 16.72% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): 3.8
• Revenue Forecast (FY): $3.85B

• Rating: 77 Outperform
• Price Target: $77.00 ▲(14.67% Upside)

A. O. Smith Corporation demonstrates strong financial performance and strategic growth initiatives, particularly with its recent acquisition. While technical indicators show mixed signals, the company's valuation and dividend yield remain attractive. The earnings call highlighted robust North American growth but also noted challenges in China and tariff impacts, balancing the overall outlook.

Positive Factors

North America Sales Growth

The growth in North America sales, driven by strategic pricing and product demand, indicates strong market positioning and potential for sustained revenue expansion.

Cash Flow Growth

Significant cash flow growth enhances financial flexibility, supporting strategic investments and shareholder returns, reinforcing long-term business stability.

Dividend Growth

Consistent dividend growth underscores financial health and management's commitment to returning value to shareholders, enhancing investor confidence.

Negative Factors

Decline in China Sales

The decline in China sales highlights exposure to economic volatility and regulatory changes, posing risks to international revenue streams.

Impact of Tariffs

Rising tariffs elevate production costs, pressuring margins and potentially affecting competitive pricing and profitability in key markets.

Softness in U.S. Residential Market

Stagnation in the U.S. residential market could limit growth opportunities, impacting sales of residential water heating products and overall revenue.

A. O. Smith Corporation Business Overview & Revenue Model

Company Description

A. O. Smith Corporation (AOS) is a leading manufacturer of water heating and water treatment products, primarily serving residential and commercial markets. Established in 1874, the company operates in two main segments: North America and Rest of World. AOS offers a wide range of products including tank and tankless water heaters, boilers, and water filtration systems, focusing on energy efficiency and innovative technology to meet the evolving needs of consumers and businesses globally.

How the Company Makes Money

A. O. Smith generates revenue primarily through the sales of its water heating and treatment products. The company's key revenue streams include residential water heaters, commercial water heaters, and water treatment products. AOS also benefits from partnerships with distributors and retailers, which enhances its market reach and product availability. Additionally, the company invests in research and development to innovate and improve its product offerings, which helps maintain competitive pricing and attract new customers. AOS's focus on energy-efficient products also aligns with growing consumer demand for sustainable solutions, further driving sales.

A. O. Smith Corporation Financial Statement Overview

Summary

A. O. Smith Corporation exhibits strong financial health with consistent profitability and growth. The income statement shows solid margins and revenue growth, the balance sheet reflects low leverage and effective equity utilization, and the cash flow statement highlights robust cash generation and management.

Income Statement

A. O. Smith Corporation demonstrates strong profitability with a consistent gross profit margin around 38% and a net profit margin of approximately 14% in the TTM. Revenue growth has been modest but positive, indicating stable demand. The EBIT and EBITDA margins are healthy, reflecting efficient operations. Overall, the income statement shows a solid financial performance with steady growth and profitability.

Balance Sheet

The balance sheet is robust with a low debt-to-equity ratio of 0.10 in the TTM, indicating low leverage and financial stability. The return on equity is strong at 27.56%, showcasing effective use of equity to generate profits. The equity ratio is healthy, suggesting a solid capital structure. However, the slight increase in debt compared to previous years could be monitored for potential risks.

Cash Flow

Cash flow analysis reveals a positive trajectory with a 15.61% growth in free cash flow in the TTM, indicating improved cash generation. The operating cash flow to net income ratio is solid, reflecting efficient cash conversion. The free cash flow to net income ratio is high, suggesting strong cash profitability. Overall, the cash flow statement indicates robust cash management and growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.83B	3.82B	3.85B	3.75B	3.54B	2.90B
Gross Profit	1.48B	1.46B	1.48B	1.33B	1.31B	1.11B
EBITDA	786.10M	786.50M	823.80M	310.00M	707.80M	531.20M
Net Income	530.50M	533.60M	556.60M	235.70M	487.10M	344.90M
Balance Sheet
Total Assets	3.17B	3.24B	3.21B	3.33B	3.47B	3.16B
Cash, Cash Equivalents and Short-Term Investments	172.80M	276.10M	363.40M	481.80M	631.40M	689.60M
Total Debt	221.40M	216.70M	155.20M	366.90M	219.00M	147.60M
Total Liabilities	1.33B	1.36B	1.37B	1.58B	1.64B	1.31B
Stockholders Equity	1.84B	1.88B	1.84B	1.75B	1.83B	1.85B
Cash Flow
Free Cash Flow	571.80M	473.80M	597.70M	321.10M	566.00M	505.30M
Operating Cash Flow	655.60M	581.80M	670.30M	391.40M	641.10M	562.10M
Investing Cash Flow	-192.70M	-267.10M	-24.10M	8.10M	-349.90M	11.80M
Financing Cash Flow	-527.30M	-408.40M	-684.70M	-430.80M	-421.00M	-374.80M

A. O. Smith Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 67.15
• 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 AOS, the sentiment is Positive. The current price of 67.15 is above the 20-day moving average (MA) of 65.57, below the 50-day MA of 67.50, and below the 200-day MA of 67.42, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 54.23 is Neutral, neither overbought nor oversold. The STOCH value of 70.76 is Neutral, 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
FLS	79 Outperform	$9.16B	20.96	20.97%	1.17%	3.19%	69.89%
AOS	77 Outperform	$9.47B	18.37	28.21%	2.03%	-1.64%	-2.50%
SPXC	77 Outperform	$10.40B	44.52	12.76%	―	12.60%	24.02%
WTS	77 Outperform	$9.09B	28.14	17.81%	0.73%	4.18%	16.05%
PNR	75 Outperform	$17.06B	26.45	17.97%	0.96%	0.83%	-1.32%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
GNRC	59 Neutral	$9.53B	30.90	12.38%	―	5.52%	9.03%

A. O. Smith Corporation Corporate Events

A. O. Smith Acquires Leonard Valve for $470 Million

On November 12, 2025, A. O. Smith Corporation announced its agreement to acquire Leonard Valve Company for $470 million, with the transaction expected to close in the first quarter of 2026. This acquisition aims to expand A. O. Smith’s presence in the water management market, enhance its digital and connected water strategy, and is anticipated to be accretive to earnings per share in 2026.