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

• Market Cap: $9.01B
• Dividend Yield: 2.13%
• Average Volume (3M): 1.28M
• Price to Earnings (P/E): 17.5
• Beta (1Y): 0.77
• 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: 1,207,963
• 30 Day Avg. Volume: 1,283,945
• 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: 1.15
• Enterprise Value/Revenue: 2.71
• Enterprise Value/Gross Profit: 7.04
• Enterprise Value/Ebitda: 13.22
• 1Y Price Target: $78.38
• Price Target Upside: 21.07% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): 3.8
• Revenue Forecast (FY): $3.85B

• Rating: 70 Outperform
• Price Target: $74.00 ▲(14.30% Upside)

A. O. Smith's strong financial performance and fair valuation are offset by bearish technical indicators and a cautious earnings outlook. The company's robust cash flow and dividend growth are positive, but challenges in China and tariff impacts present risks.

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 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 through the sale of its core products, which include residential and commercial water heaters, boilers, and water treatment systems. The company operates in two main segments: the North America segment and the Rest of the World segment, with a significant portion of its revenue coming from North America due to the strong demand for energy-efficient water heating solutions. Key revenue streams include direct sales to retailers, wholesalers, and distributors, as well as sales through online platforms. Additionally, A. O. Smith benefits from partnerships with major retailers and plumbing professionals, enhancing its market reach. The company's focus on innovation, particularly in developing advanced technologies and sustainable products, further contributes to its revenue growth by attracting environmentally conscious consumers and businesses.

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: Negative
• Last Price: 64.74
• 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 Negative. The current price of 64.74 is below the 20-day moving average (MA) of 66.76, below the 50-day MA of 69.57, and below the 200-day MA of 67.39, indicating a bearish trend. The MACD of -1.12 indicates Negative momentum. The RSI at 35.80 is Neutral, neither overbought nor oversold. The STOCH value of 41.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	$8.54B	19.54	20.97%	1.25%	3.19%	69.89%
PNR	75 Outperform	$17.07B	26.47	17.97%	0.96%	0.83%	-1.32%
SPXC	75 Outperform	$10.54B	45.10	12.76%	―	12.60%	24.02%
WTS	73 Outperform	$9.00B	27.85	17.81%	0.70%	4.18%	16.05%
AOS	70 Outperform	$9.01B	17.48	28.21%	2.13%	-1.64%	-2.50%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
GNRC	59 Neutral	$8.87B	28.78	12.38%	―	5.52%	9.03%

A. O. Smith Corporation Corporate Events

A. O. Smith Reports Strong Q3 Earnings Growth

A. O. Smith Corporation is a global leader in water technology, specializing in the manufacture of residential and commercial water heating equipment, boilers, and water treatment products. In its third quarter of 2025, A. O. Smith reported a 15% increase in earnings per share, reaching $0.94, and a 4% rise in sales to $943 million, driven by strong performance in North America. The company saw a 6% growth in North American sales and a 110 basis point expansion in operating margin, while facing a 12% sales decline in China. Despite challenges in China, the company improved its operating margin in the Rest of World segment by 90 basis points. A. O. Smith’s cash flow from operations increased by 21% to $434 million, and it repurchased 5 million shares for $335.4 million in the first nine months of 2025. Looking ahead, A. O. Smith projects consolidated sales to be flat to up 1% for the full year, with an adjusted EPS range of $3.70 to $3.85, reflecting cautious optimism amid ongoing challenges in the Chinese market and the North American residential sector.

A.O. Smith Earnings Call: Mixed Sentiment Amid Growth

A.O. Smith Corporation’s recent earnings call presented a mixed sentiment, reflecting strong performance in North America with notable sales and EPS growth, countered by challenges in China and tariff impacts. The company demonstrated robust cash flow growth and maintained a strong dividend policy, yet adjustments to the 2025 EPS forecast and pressures in the U.S. residential market tempered the overall outlook.