A. O. Smith Corporation (AOS)
NYSE:AOS
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A. O. Smith Corporation
(NYSE:AOS)
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Rating:77Outperform
Price Target:
$73.00
▲(13.44% Upside)
Action:ReiteratedDate:01/30/26
The score is driven primarily by strong underlying financial quality (high profitability and a low-leverage balance sheet) and supportive price momentum (trading above key moving averages with positive MACD). Offsetting factors include modest growth/FCF consistency concerns and a valuation that looks fair rather than clearly discounted, while earnings call guidance is constructive but tempered by China and cost headwinds.
Positive Factors
Conservative balance sheet / low leverage
Very low leverage and a modest absolute debt load provide durable financial flexibility: the company can fund capex, acquisitions, and shareholder returns while withstanding demand cycles. Low solvency risk supports stable operations and strategic optionality over the next 2–6 months.
Negative Factors
Modest top-line growth
Flat historical sales and low single-digit organic growth guidance constrain long-term upside unless product expansion or M&A accelerates volume. Persistent reliance on replacement cycles and slow new-construction demand limits revenue leverage and increases dependence on margin gains or acquisitions.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative balance sheet / low leverage
Very low leverage and a modest absolute debt load provide durable financial flexibility: the company can fund capex, acquisitions, and shareholder returns while withstanding demand cycles. Low solvency risk supports stable operations and strategic optionality over the next 2–6 months.
Read all positive factors
A. O. Smith Corporation (AOS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.90B
Dividend Yield2.04%
Average Volume (3M)1.41M
Price to Earnings (P/E)17.1
Beta (1Y)0.72
Revenue Growth-1.64%
EPS Growth-2.50%
CountryUS
Employees12,700
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.90
Shares Outstanding112,426,760
10 Day Avg. Volume1,523,960
30 Day Avg. Volume1,410,641
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 Cap1.02
Enterprise Value/Revenue2.37
Enterprise Value/Gross Profit6.11
Enterprise Value/Ebitda11.17
Forecast
1Y Price Target
$76.29Price Target Upside18.55% Upside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)4.01
Revenue Forecast (FY)$3.96B
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:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call highlighted strong profitability execution (record EPS, margin expansion in North America and water treatment, 15% free cash flow growth, continued shareholder returns) and strategic progress (Leonard Valve acquisition, India/PURIT growth). However, material headwinds persist—most notably meaningful China weakness, wholesale channel pressure in North America, modest overall revenue growth, and rising input and financing costs. On balance, operational improvements and cash generation materially offset the key challenges, supporting a constructive outlook with some caution around China and cost trends.Positive Updates
Record EPS and Year-over-Year Earnings Growth
2025 diluted EPS reached a record $3.85, up 6% versus adjusted 2024 EPS of $3.73, driven by profitability improvements across segments.
Negative Updates
Significant China Demand Weakness
Full-year third-party China sales decreased 12% in local currency in 2025 due to economic weakness, soft consumer demand and discontinued government subsidy programs; management expects mid-single digit China sales declines in 2026 with first-half pressure and slow recovery into the back half.
Read all updates
Q4-2025 Updates
Positive
Negative
Record EPS and Year-over-Year Earnings Growth
2025 diluted EPS reached a record $3.85, up 6% versus adjusted 2024 EPS of $3.73, driven by profitability improvements across segments.
Read all positive updates
Company Guidance
Management guided 2026 EPS of $3.85–$4.15 (midpoint ≈ +4% vs. 2025), with top-line growth of roughly 2%–5% and segment margin targets of 24–24.5% for North America and 8–9% for Rest of World; key market assumptions include US residential industry unit volumes flat-to-down, US commercial water heater volumes up mid-single-digits (commercial electric flat), North America boiler sales +6–8%, North America water treatment sales +10–12%, and China sales down mid-single-digits. The outlook assumes steel prices ~+10% year‑over‑year, no tariff changes, CapEx of $70–80 million, free cash flow of $525–575 million, interest expense of $30–40 million (including $470 million of debt to fund the Leonard Valve acquisition), corporate & other expense of $80–85 million, an effective tax rate of 24–24.5%, a 5 million‑share repurchase authorization with roughly $200 million expected to be repurchased, diluted shares of ~138 million, and Leonard Valve contributing about $70 million of sales in 2026.A. O. Smith Corporation Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
86
Very Positive
Cash Flow
72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.83B | 3.82B | 3.85B | 3.75B | 3.54B |
| Gross Profit | 1.49B | 1.46B | 1.48B | 1.33B | 1.31B |
| EBITDA | 792.20M | 786.50M | 823.80M | 310.00M | 707.80M |
| Net Income | 546.20M | 533.60M | 556.60M | 235.70M | 487.10M |
Balance Sheet | |||||
| Total Assets | 3.14B | 3.24B | 3.21B | 3.33B | 3.47B |
| Cash, Cash Equivalents and Short-Term Investments | 193.20M | 276.10M | 363.40M | 481.80M | 631.40M |
| Total Debt | 192.10M | 216.70M | 155.20M | 366.90M | 219.00M |
| Total Liabilities | 1.28B | 1.36B | 1.37B | 1.58B | 1.64B |
| Stockholders Equity | 1.86B | 1.88B | 1.84B | 1.75B | 1.83B |
Cash Flow | |||||
| Free Cash Flow | 546.00M | 473.80M | 597.70M | 321.10M | 566.00M |
| Operating Cash Flow | 616.80M | 581.80M | 670.30M | 391.40M | 641.10M |
| Investing Cash Flow | -53.00M | -267.10M | -24.10M | 8.10M | -349.90M |
| Financing Cash Flow | -633.10M | -408.40M | -684.70M | -430.80M | -421.00M |
A. O. Smith Corporation Technical Analysis
Negative
64.35
Price Trends
72.20
Negative
69.71
Negative
69.49
Negative
Market Momentum
-2.21
Negative
36.45
Neutral
46.34
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 64.35 is below the 20-day moving average (MA) of 66.20, below the 50-day MA of 72.20, and below the 200-day MA of 69.49, indicating a bearish trend. The MACD of -2.21 indicates Negative momentum. The RSI at 36.45 is Neutral, neither overbought nor oversold. The STOCH value of 46.34 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $9.63B | 27.54 | 17.82% | 0.70% | 4.18% | 16.05% | |
77 Outperform | $8.90B | 17.13 | 29.51% | 2.04% | -1.64% | -2.50% | |
76 Outperform | $9.84B | 30.59 | 13.29% | ― | 12.60% | 24.02% | |
68 Neutral | $14.01B | 26.14 | 17.48% | 0.96% | 0.83% | -1.32% | |
66 Neutral | $9.58B | 26.05 | 15.81% | 1.17% | 3.19% | 69.89% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $11.39B | 50.02 | 6.19% | ― | 5.52% | 9.03% |
* Industrials Sector Average
AOS
A. O. Smith Corporation
64.35
4.93
8.29%
FLS
Flowserve
75.24
35.81
90.84%
GNRC
Generac Holdings
194.09
83.44
75.41%
PNR
Pentair
85.82
9.08
11.83%
SPXC
SPX
197.29
75.59
62.11%
WTS
Watts Water Technologies
288.92
107.36
59.13%
A. O. Smith Corporation Corporate Events
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
A. O. Smith Completes Leonard Valve Cash Acquisition
Positive
Jan 6, 2026
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 minim...
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.