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

• Market Cap: $9.70B
• Dividend Yield: 1.96%
• Average Volume (3M): 1.55M
• Price to Earnings (P/E): 19.1
• Beta (1Y): 0.83
• Revenue Growth: -1.60%
• EPS Growth: -7.12%
• Country: US
• Employees: 12,700
• Sector: Industrials
• Sector Strength: 83
• Industry: Industrial - Machinery
• EPS (TTM): 0.95
• Shares Outstanding: 116,238,976
• 10 Day Avg. Volume: 1,450,632
• 30 Day Avg. Volume: 1,551,116
• PEG Ratio: -13.77
• Price to Book (P/B): 5.33
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 23.92
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $72.00
• Price Target Upside: 5.43% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

A. O. Smith Corporation demonstrates strong financial stability with efficient operations and low leverage, contributing positively to its stock score. The technical analysis indicates positive momentum, though caution is advised due to overbought conditions. Valuation metrics show the stock is fairly valued, with a moderate dividend yield. The latest earnings call highlights both opportunities and risks, with tariff-related uncertainties and market challenges in China being notable concerns.

Positive Factors

Commercial Water Heater Shipments

Total shipments of commercial water heaters increased 22.3% month over month and increased 0.8% year over year.

Sales Forecast

A.O. Smith's North American sales are predicted to be up 1.8% year over year, which is above consensus for the North American Segment.

Negative Factors

Overall Water Heater Shipments

Total shipments of residential and commercial water heaters decreased 11.2% month over month and decreased 8.2% year over year in November on a unit basis.

Residential Water Heater Shipments

Total shipments of residential water heaters decreased 5.1% year over year.

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 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 68.29
• 50DMA: Positive
• 100DMA: Positive
• 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 Positive. The current price of 68.29 is above the 20-day moving average (MA) of 65.50, above the 50-day MA of 65.49, and below the 200-day MA of 72.54, indicating a neutral trend. The MACD of 0.97 indicates Negative momentum. The RSI at 60.55 is Neutral, neither overbought nor oversold. The STOCH value of 73.29 is Neutral, 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
SPXC	80 Outperform	$6.95B	34.42	15.24%	―	10.78%	30.05%
PNR	78 Outperform	$15.07B	24.00	18.59%	1.03%	-0.42%	3.23%
WTS	78 Outperform	$7.07B	24.58	17.61%	0.73%	3.89%	8.17%
CR	76 Outperform	$9.57B	32.41	18.82%	0.50%	6.65%	39.13%
IEX	75 Outperform	$13.56B	28.78	12.73%	1.50%	1.66%	-17.18%
AOS	71 Outperform	$9.70B	19.10	27.97%	1.96%	-1.60%	-7.12%
Sector *	64 Neutral	$4.30B	11.88	5.23%	249.82%	4.12%	-10.27%

A. O. Smith Corporation Corporate Events

A. O. Smith Announces Leadership Transition Effective July 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.