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A. O. Smith Corporation (AOS)
NYSE:AOS
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A. O. Smith Corporation
(NYSE:AOS)
71Outperform
Positive Factors
Sales Predictions
A.O. Smith's North American sales are predicted to be up 1.8% y/y, which is above consensus for the North American Segment.
Shipments
Total shipments of commercial water heaters increased 22.3% month over month and increased 0.8% year over year.
Negative Factors
Residential Shipments
Total shipments of residential water heaters decreased 5.1% year over year.
A. O. Smith Corporation (AOS) vs. S&P 500 (SPY)
Market Cap
$10.02B
Dividend Yield1.9%
Average Volume (3M)1.49M
Price to Earnings (P/E)19.7
Beta (1Y)0.82
Revenue Growth-1.60%
EPS Growth-7.12%
CountryUS
Employees12,700
SectorIndustrials
Sector Strength91
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.95
Shares Outstanding116,238,976
10 Day Avg. Volume1,230,542
30 Day Avg. Volume1,494,112
Financial Highlights & Ratios
PEG Ratio-13.77
Price to Book (P/B)5.33
Price to Sales (P/S)0.00
P/FCF Ratio23.92
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$72.00Price Target Upside3.42% Upside
Rating ConsensusHold
Number of Analyst Covering8
A. O. Smith Corporation Business Overview & Revenue Model
Company DescriptionA. O. Smith Corporation (AOS) is a leading manufacturer and marketer of residential and commercial water heating equipment and boilers, as well as water treatment products. The company operates in two primary segments: North America and Rest of World, serving customers across the globe. A. O. Smith is committed to providing innovative and energy-efficient solutions for heating and treating water, catering to both residential and commercial markets.
How the Company Makes MoneyA. O. Smith Corporation generates revenue primarily through the sale of its water heaters, boilers, and water treatment products. The company's revenue model is centered around manufacturing and distributing these products to a diverse customer base, including homeowners, businesses, and industrial facilities. Key revenue streams include sales from its North American operations, which account for a significant portion of its earnings, and international sales, particularly in fast-growing markets such as China and India. Additionally, A. O. Smith benefits from strategic partnerships with distributors and retailers, enabling broader market reach and customer access. The company's focus on energy efficiency and innovative product offerings also contributes to its competitive position and revenue growth.
A. O. Smith Corporation Financial Statement Overview
Summary
A. O. Smith Corporation exhibits strong financial health with stable profitability, efficient operations, and low leverage. While revenue growth has faced challenges, the company maintains solid margins and cash flow metrics, ensuring resilience in the industrial machinery sector. The balance sheet's low debt levels and strong equity position further reinforce financial stability.Income Statement
A. O. Smith Corporation demonstrates strong profitability with consistent gross and net profit margins over the years. The TTM (Trailing-Twelve-Months) gross profit margin stands at approximately 38.0%, and the net profit margin is 13.7%. Despite a slight decline in revenue from the previous year, the company maintains solid EBIT and EBITDA margins of 18.6% and 19.6% respectively, reflecting efficient cost control and operational performance.75
Positive
Balance Sheet
The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.14, highlighting low leverage and financial stability. The equity ratio stands at about 64.3%, indicating a solid equity base. Return on equity (ROE) is robust at 24.9%, showcasing efficient use of shareholder funds to generate profits.80
Positive
Cash Flow
Cash flow management is strong with a positive free cash flow and a free cash flow to net income ratio of approximately 0.78. However, there is a decline in free cash flow growth compared to previous years. The operating cash flow to net income ratio is healthy at 0.98, indicating effective cash conversion from earnings.70
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.80B | 3.82B | 3.85B | 3.75B | 3.54B | 2.90B | Gross Profit |
| 1.45B | 1.46B | 1.48B | 1.33B | 1.31B | 1.11B | EBIT |
| 706.30M | 716.80M | 757.40M | 233.10M | 629.90M | 458.90M | EBITDA |
| 768.80M | 786.50M | 823.80M | 310.00M | 707.80M | 531.20M | Net Income Common Stockholders |
| 522.60M | 533.60M | 556.60M | 235.70M | 487.10M | 344.90M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 200.20M | 276.10M | 363.40M | 481.80M | 631.40M | 689.60M | Total Assets |
| 3.27B | 3.24B | 3.21B | 3.33B | 3.47B | 3.16B | Total Debt |
| 295.00M | 216.70M | 155.20M | 366.90M | 219.00M | 147.60M | Net Debt |
| 122.00M | -22.90M | -184.70M | -24.30M | -224.30M | -425.50M | Total Liabilities |
| 1.41B | 1.36B | 1.37B | 1.58B | 1.64B | 1.31B | Stockholders Equity |
| 1.86B | 1.88B | 1.84B | 1.75B | 1.83B | 1.85B |
| Cash Flow | Free Cash Flow | ||||
| 406.60M | 473.80M | 597.70M | 321.10M | 566.00M | 505.30M | Operating Cash Flow |
| 513.90M | 581.80M | 670.30M | 391.40M | 641.10M | 562.10M | Investing Cash Flow |
| -206.70M | -267.10M | -24.10M | 8.10M | -349.90M | 11.80M | Financing Cash Flow |
| -382.90M | -408.40M | -684.70M | -430.80M | -421.00M | -374.80M |
A. O. Smith Corporation Technical Analysis
Positive
69.62
Price Trends
65.88
Positive
66.66
Positive
72.11
Negative
Market Momentum
1.39
Negative
58.83
Neutral
82.45
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 69.62 is above the 20-day moving average (MA) of 67.80, above the 50-day MA of 65.88, and below the 200-day MA of 72.11, indicating a neutral trend. The MACD of 1.39 indicates Negative momentum. The RSI at 58.83 is Neutral, neither overbought nor oversold. The STOCH value of 82.45 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 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
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $7.30B | 36.02 | 15.24% | ― | 10.78% | 30.05% | |
78 Outperform | $16.59B | 26.07 | 18.59% | 0.95% | -0.42% | 3.23% | |
78 Outperform | $8.23B | 27.95 | 17.61% | 0.70% | 3.89% | 8.17% | |
76 Outperform | $10.23B | 34.47 | 18.82% | 0.47% | 6.65% | 39.13% | |
75 Outperform | $14.35B | 30.23 | 12.73% | 1.45% | 1.66% | -17.18% | |
71 Outperform | $10.02B | 19.72 | 27.97% | 1.90% | -1.60% | -7.12% | |
64 Neutral | $4.44B | 11.99 | 5.16% | 249.23% | 4.01% | -11.87% |
* Industrials Sector Average
Performance Comparison
AOS
A. O. Smith Corporation
69.62
-14.56
-17.30%
IEX
IDEX
188.26
-25.92
-12.10%
PNR
Pentair
99.77
16.40
19.67%
SPXC
SPX
155.81
11.50
7.97%
WTS
Watts Water Technologies
243.83
29.96
14.01%
CR
Crane Company
175.21
28.05
19.06%
A. O. Smith Corporation Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: 8.02%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative aspects. While there were notable achievements such as leadership transition, growth in North America boiler sales, and successful cost management efforts, challenges included declines in water heater sales and the Chinese market, overall sales decrease, and tariff-related cost uncertainties.Q1-2025 Updates
Positive Updates
Leadership Transition
Steve Shafer will assume the role of President and Chief Executive Officer effective July 1st, with Kevin Wheeler remaining engaged as Executive Chairman of the Board.
North America Boiler Sales Growth
North America boiler sales increased by 10% compared to the first quarter of 2024, continuing to outperform the market.
Share Repurchase Program
Repurchased $121 million of shares in the first quarter of 2025, front-loading a portion of the full-year repurchase outlook of $400 million.
Profitability Tracking
First quarter profitability is tracking in line with the full-year 250 basis point improvement goal in North American water treatment business.
SG&A Cost Management
Cost containment actions resulted in nearly flat SG&A spend compared to the first quarter last year, despite inflation and acquisition expenses.
Negative Updates
Decline in North America Water Heater Sales
North America water heater sales declined 4% in the first quarter, primarily driven by lower volumes and a challenging year-over-year comparison.
China Market Weakness
China third-party sales decreased 4% due to ongoing economic weakness and soft consumer demand, with residential water treatment products and gas water heaters seeing lower volumes.
Overall Sales Decline
Sales of $964 million in the first quarter of 2025 decreased by 2% year-over-year, with earnings per share decreasing by 5% compared to the prior period.
Tariff-Related Cost Uncertainty
Tariff-related impacts could increase total cost of goods sold by approximately 6% to 8%, with ongoing uncertainty around tariffs affecting pricing and supply chain strategies.
Company Guidance
In the A. O. Smith Corporation's first-quarter 2025 earnings call, the company maintained its EPS guidance range of $3.60 to $3.90 per share, with an expected midpoint slightly higher than the 2024 adjusted EPS. The company reported first-quarter sales of $964 million, a 2% year-over-year decrease, and earnings of $0.95 per share, a 5% decrease from the previous year. North American segment sales were $749 million, reflecting a 2% decrease, while the rest of the world segment recorded sales of $227 million, remaining flat year-over-year. The company's guidance considered potential impacts from announced tariffs, estimating a 6% to 8% increase in the total cost of goods sold, exclusive of mitigation efforts. A. O. Smith also projects a capital expenditure of $90 to $100 million for 2025, with free cash flow expected to be between $500 and $550 million. The company emphasized its focus on strategic sourcing, cost containment measures, and accelerating the production shift of tankless water heaters from China to Mexico to mitigate tariff impacts.A. O. Smith Corporation Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
A. O. Smith Announces Leadership Transition Effective July 2025
Neutral
Apr 25, 2025
On April 25, 2025, A. O. Smith Corporation announced a leadership transition effective July 1, 2025, with Kevin J. Wheeler moving from Chairman and CEO to Executive Chairman, and Stephen M. Shafer, the current President and COO, being appointed as the new CEO. This change marks a significant shift in the company’s leadership as Shafer, who joined A. O. Smith in March 2024, will be responsible for global operations and strategy development. Under Wheeler’s leadership, the company experienced substantial growth, including key acquisitions and navigating challenges during the COVID-19 pandemic.
Spark’s Take on AOS Stock
According to Spark, TipRanks’ AI Analyst, AOS is a Outperform.
A. O. Smith Corporation’s overall score reflects its strong financial health and effective operational management. The financial performance is a key strength, supported by robust margins and low leverage. However, technical indicators suggest a bearish trend, and the earnings call highlights challenges in key markets. The valuation is fair, providing a moderate income stream through dividends. Overall, the stock demonstrates resilience with areas of concern in market performance.
To see Spark’s full report on AOS stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.