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

• Market Cap: $10.09B
• Dividend Yield: 2.04%
• Average Volume (3M): 1.11M
• Price to Earnings (P/E): 19.6
• Beta (1Y): 0.71
• 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: 1,265,384
• 30 Day Avg. Volume: 1,105,077
• 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: 1.03
• Enterprise Value/Revenue: 2.71
• Enterprise Value/Gross Profit: 7.04
• Enterprise Value/Ebitda: 13.22
• 1Y Price Target: $76.86
• Price Target Upside: 6.04% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8
• EPS Forecast (FY): 4.14
• Revenue Forecast (FY): $4.01B

• Rating: 78 Outperform
• Price Target: $78.00 ▲(7.62% Upside)

Overall score is driven primarily by strong financial performance (profitability, cash flow growth, and low leverage). Valuation and technicals are supportive but not exceptional, while earnings-call and event-driven factors are constructive yet tempered by China softness, tariff pressure, and a lowered 2025 EPS outlook.

Positive Factors

Sustained Profitability Margins

Consistently high gross and net margins reflect durable pricing power and efficient operations across residential and commercial products. These margins support long-term cash generation, fund R&D and sustainability initiatives, and provide resilience through demand cycles.

Strong Free Cash Flow Generation

Material FCF growth strengthens financial flexibility, enabling steady dividend increases, disciplined capex, and selective M&A without eroding the balance sheet. Reliable cash conversion supports reinvestment in efficiency and product innovation over multiple years.

Conservative Capital Structure

Very low leverage combined with high ROE indicates efficient capital use and a strong buffer against downturns. This conservative position gives management optionality for strategic investments, dividends, or buybacks while maintaining financial stability.

Negative Factors

Exposure to China Downturn

A 12% China sales decline signals structural headwinds from weaker demand and policy changes (reduced subsidies). Persistent softness in a large market can erode long-term growth prospects for the Rest of World segment and increase company reliance on North America.

Tariff-Driven Cost Pressure

A roughly 5% tariff-related COGS increase is a structural headwind that can persist with trade policy shifts. Unless offset by sustained price increases or supply-chain reconfiguration, this pressure reduces margin sustainability and forces tougher trade-offs on investment versus pricing.

Acquisition Financing and Integration Risk

Financing the Leonard Valve buy increases leverage, adds covenants and variable-rate interest exposure, and creates execution risk integrating new products and channels. These factors can constrain flexibility and may temporarily pressure cash flow and margins during integration.

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 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: 72.48
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 72.48 is above the 20-day moving average (MA) of 69.06, above the 50-day MA of 67.34, and above the 200-day MA of 67.83, indicating a bullish trend. The MACD of 1.16 indicates Negative momentum. The RSI at 69.30 is Neutral, neither overbought nor oversold. The STOCH value of 95.73 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
FLS	79 Outperform	$9.81B	22.45	20.97%	1.17%	3.19%	69.89%
AOS	78 Outperform	$10.09B	19.57	28.21%	2.04%	-1.64%	-2.50%
SPXC	77 Outperform	$10.85B	46.43	12.76%	―	12.60%	24.02%
WTS	77 Outperform	$9.92B	30.68	17.81%	0.70%	4.18%	16.05%
PNR	75 Outperform	$17.56B	27.22	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	$9.44B	30.61	12.38%	―	5.52%	9.03%

A. O. Smith Corporation Corporate Events

A. O. Smith Completes Leonard Valve Cash Acquisition

On January 5, 2026, A. O. Smith Corporation entered into a new unsecured credit agreement providing a $470 million term loan maturing in 2029, with variable-rate pricing tied to SOFR or a base rate and covenants that cap leverage and require minimum interest coverage, giving lenders remedies in the event of default. The company drew the full amount on January 5, 2026 and used the proceeds to finance the $470 million all‑cash acquisition of LVC Holdco LLC, known as Leonard Valve, which it completed on January 6, 2026, a deal valued at about $412 million after estimated tax benefits and expected to broaden A. O. Smith’s presence in commercial and institutional water management by adding Leonard Valve’s thermostatic and digital mixing valves, temperature control solutions and Heat‑Timer boiler controls to its integrated product offering.

The most recent analyst rating on (AOS) stock is a Buy with a $77.00 price target. To see the full list of analyst forecasts on A. O. Smith Corporation stock, see the AOS Stock Forecast page.

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.

The most recent analyst rating on (AOS) stock is a Hold with a $75.00 price target. To see the full list of analyst forecasts on A. O. Smith Corporation stock, see the AOS Stock Forecast page.