A. O. Smith Corporation (AOS)
NYSE:AOS
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A. O. Smith Corporation
(NYSE:AOS)
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Rating:72Outperform
Price Target:
$71.00
▲(9.53% Upside)
Action:Reiterated
Date:04/30/26
The score is driven by strong underlying financial quality (high margins, robust free cash flow, and low leverage) and reasonable valuation. Offsetting factors are weak technical momentum (price below key moving averages with negative MACD) and earnings-call risks centered on China weakness and input-cost pressure despite maintained full-year guidance and capital returns.
Positive Factors
High margins and strong profitability
Sustained high gross and net margins indicate durable pricing power and a favorable product mix (premium water heaters, boilers, treatment systems). Strong operating profitability and elevated ROE support reinvestment, shareholder returns, and resilience when volumes soften.
Negative Factors
Sharp recent revenue contraction
A near-term nearly 50% TTM revenue decline (noted in reporting) signals structural demand disruption or significant timing shifts. Sustained top-line weakness erodes operating leverage, can compress margins over time, and reduces capacity to fund growth or returns absent margin recovery.
Read all positive and negative factors
Positive Factors
Negative Factors
High margins and strong profitability
Sustained high gross and net margins indicate durable pricing power and a favorable product mix (premium water heaters, boilers, treatment systems). Strong operating profitability and elevated ROE support reinvestment, shareholder returns, and resilience when volumes soften.
Read all positive factors
A. O. Smith Corporation (AOS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.72B
Dividend Yield2.04%
Average Volume (3M)1.46M
Price to Earnings (P/E)19.4
Beta (1Y)0.69
Revenue Growth0.23%
EPS Growth4.76%
CountryUS
Employees12,700
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)3.75
Shares Outstanding111,965,460
10 Day Avg. Volume1,529,472
30 Day Avg. Volume1,458,809
Financial Highlights & Ratios
PEG Ratio2.98
Price to Book (P/B)5.04
Price to Sales (P/S)2.44
P/FCF Ratio17.14
Enterprise Value/Market Cap1.07
Enterprise Value/Revenue2.18
Enterprise Value/Gross Profit5.61
Enterprise Value/Ebitda10.44
Forecast
1Y Price Target
$69.50Price Target Upside7.22% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)3.78
Revenue Forecast (FY)$3.92B
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...
How the Company Makes Money
A. O. Smith makes money primarily by selling manufactured water heating and water treatment products and related accessories into residential and commercial end markets. Its core revenue stream is product sales of water heaters and boilers (includ...
A. O. Smith Corporation Earnings Call Summary
Earnings Call Date:Apr 30, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Neutral
The call presents a balanced picture: notable operational and financial positives (strong free cash flow, share repurchases, dividend, Leonard Valve contribution, margin expansion in North America, and maintained free cash flow/EPS guidance) are tempered by material near-term headwinds (steep China declines, Rest of World weakness, rising steel and freight costs, one-time restructuring and weather-related production impacts, and higher leverage from the acquisition). Management articulated actions to improve profitability and provided clear guidance, but near-term margin pressure and China weakness represent meaningful risks.Positive Updates
Strong Free Cash Flow and Balance Sheet Actions
Generated free cash flow of $119M in Q1 (a significant increase vs. 2025); cash balance $204M; repurchased ~700k shares for $51M in Q1 and plan to repurchase $200M in 2026; Board approved quarterly dividend of $0.36 per share.
Negative Updates
Total Company Sales and EPS Decline
Total company Q1 sales decreased 2% to $946M; adjusted EPS was $0.85, down 11% year over year, driven by lower volumes and $0.03 of transaction-related expenses from the Leonard Valve acquisition.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Free Cash Flow and Balance Sheet Actions
Generated free cash flow of $119M in Q1 (a significant increase vs. 2025); cash balance $204M; repurchased ~700k shares for $51M in Q1 and plan to repurchase $200M in 2026; Board approved quarterly dividend of $0.36 per share.
Read all positive updates
Company Guidance
A. O. Smith updated 2026 guidance calling for adjusted EPS of $3.70–$4.00 (excludes an expected ~ $20 million North America water‑treatment restructuring/impairment in Q2 that should yield $6–8 million annual savings beginning in 2027), with Q2 roughly 25% of the midpoint; key assumptions include steel costs rising ~15% year‑over‑year, freight/non‑steel/tariff pressures adding ~3% to total COGS, CapEx of $70–$80 million, free cash flow of $525–$575 million, interest expense of $30–$40 million, an effective tax rate of 24–24.5% and ~138 million diluted shares. Operational and segment metrics: total revenue growth of ~2–4%, North America segment margin ~24% and Rest of World 6–7%; product assumptions include North America boiler sales +6–8% and water treatment sales +5–6%, Leonard Valve to contribute ~ $70 million in sales and deliver double‑digit growth, China sales down low double digits in local currency (Q2 ~15% below Q1); balance sheet and capital return items noted were cash $204 million, net debt $412 million, leverage 24.7%, $119 million FCF in Q1, Q1 EPS $0.85, a $0.36 quarterly dividend, and a planned $200 million of share repurchases for 2026 (700k shares, $51M repurchased in Q1).A. O. Smith Corporation Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
88
Very Positive
Cash Flow
84
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.81B | 3.83B | 3.82B | 3.85B | 3.75B | 3.54B |
| Gross Profit | 1.48B | 1.49B | 1.46B | 1.48B | 1.33B | 1.31B |
| EBITDA | 794.70M | 792.20M | 786.50M | 823.80M | 310.00M | 707.80M |
| Net Income | 527.60M | 546.20M | 533.60M | 556.60M | 235.70M | 487.10M |
Balance Sheet | ||||||
| Total Assets | 3.65B | 3.14B | 3.24B | 3.21B | 3.33B | 3.47B |
| Cash, Cash Equivalents and Short-Term Investments | 203.90M | 193.20M | 276.10M | 363.40M | 481.80M | 631.40M |
| Total Debt | 656.50M | 192.10M | 216.70M | 155.20M | 366.90M | 219.00M |
| Total Liabilities | 1.49B | 1.28B | 1.36B | 1.37B | 1.58B | 1.64B |
| Stockholders Equity | 1.88B | 1.86B | 1.88B | 1.84B | 1.75B | 1.83B |
Cash Flow | ||||||
| Free Cash Flow | 647.50M | 546.00M | 473.80M | 597.70M | 321.10M | 566.00M |
| Operating Cash Flow | 707.50M | 616.80M | 581.80M | 670.30M | 391.40M | 641.10M |
| Investing Cash Flow | -522.70M | -53.00M | -267.10M | -24.10M | 8.10M | -349.90M |
| Financing Cash Flow | -176.70M | -633.10M | -408.40M | -684.70M | -430.80M | -421.00M |
A. O. Smith Corporation Technical Analysis
Negative
64.82
Price Trends
70.67
Negative
69.80
Negative
69.58
Negative
Market Momentum
-1.22
Negative
44.04
Neutral
29.28
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 64.82 is below the 20-day moving average (MA) of 65.25, below the 50-day MA of 70.67, and below the 200-day MA of 69.58, indicating a bearish trend. The MACD of -1.22 indicates Negative momentum. The RSI at 44.04 is Neutral, neither overbought nor oversold. The STOCH value of 29.28 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 Risk Analysis
A. O. Smith Corporation disclosed 20 risk factors in its most recent earnings report. A. O. Smith Corporation reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
A. O. Smith Corporation Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $9.91B | 23.86 | 18.38% | 0.70% | 14.22% | 25.22% | |
72 Outperform | $7.72B | 19.44 | 28.42% | 2.04% | 0.23% | 4.76% | |
72 Outperform | $10.06B | 37.82 | 12.67% | ― | 17.39% | 20.78% | |
68 Neutral | $15.52B | 38.94 | 7.18% | ― | -0.51% | -44.42% | |
66 Neutral | $11.75B | 20.53 | 17.74% | 0.96% | 3.10% | 4.96% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $8.32B | 28.68 | 15.93% | 1.17% | 0.83% | 26.77% |
* Industrials Sector Average
AOS
A. O. Smith Corporation
56.01
-13.05
-18.89%
FLS
Flowserve
65.07
14.41
28.45%
GNRC
Generac Holdings
263.68
134.73
104.48%
PNR
Pentair
72.68
-27.12
-27.18%
SPXC
SPX
200.99
44.74
28.63%
WTS
Watts Water Technologies
296.81
52.18
21.33%
A. O. Smith Corporation Corporate Events
Executive/Board ChangesShareholder Meetings
A. O. Smith Shareholders Back Board, Reject Director Resignation
Neutral
Apr 17, 2026
At its April 13, 2026 Annual Meeting of Stockholders, A. O. Smith Corporation’s shareholders elected all nominated directors for both its Class A and common stock, approved on an advisory basis the compensation of its named executive officer...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.