A. O. Smith Corporation
A. O. Smith Corporation Fundamental Analysis
A. O. Smith Corporation (AOS) shows moderate financial fundamentals with a PE ratio of 19.91, profit margin of 14.26%, and ROE of 29.51%. The company generates $3.9B in annual revenue with weak year-over-year growth of -0.90%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 62.1/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze AOS's fundamental strength across five key dimensions:
Efficiency Score
ExcellentAOS demonstrates superior asset utilization.
Valuation Score
ModerateAOS shows balanced valuation metrics.
Growth Score
WeakAOS faces weak or negative growth trends.
Financial Health Score
ExcellentAOS maintains a strong and stable balance sheet.
Profitability Score
ModerateAOS maintains healthy but balanced margins.
Key Financial Metrics
Is AOS Expensive or Cheap?
P/E Ratio
AOS trades at 19.91 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, AOS's PEG of 4.93 indicates potential overvaluation.
Price to Book
The market values A. O. Smith Corporation at 5.85 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 13.45 times EBITDA. This signals the market has high growth expectations.
How Well Does AOS Make Money?
Net Profit Margin
For every $100 in sales, A. O. Smith Corporation keeps $14.26 as profit after all expenses.
Operating Margin
Core operations generate 19.01 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $29.51 in profit for every $100 of shareholder equity.
ROA
A. O. Smith Corporation generates $17.38 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
A. O. Smith Corporation produces operating cash flow of $621.63M, showing steady but balanced cash generation.
Free Cash Flow
A. O. Smith Corporation generates strong free cash flow of $550.28M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $3.90 in free cash annually.
FCF Yield
AOS converts 5.00% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
19.91
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
4.93
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.85
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.86
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.10
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.50
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.30
vs 25 benchmark
ROA
Return on assets percentage
0.17
vs 25 benchmark
ROCE
Return on capital employed
0.32
vs 25 benchmark
How AOS Stacks Against Its Sector Peers
| Metric | AOS Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 19.91 | 26.76 | Better (Cheaper) |
| ROE | 29.51% | 1300.00% | Weak |
| Net Margin | 14.26% | -29570.00% (disorted) | Strong |
| Debt/Equity | 0.10 | 0.79 | Strong (Low Leverage) |
| Current Ratio | 1.50 | 10.68 | Neutral |
| ROA | 17.38% | -1545134.00% (disorted) | Strong |
AOS outperforms its industry in 4 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews A. O. Smith Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
43.60%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
62.32%
Industry Style: Cyclical, Value, Infrastructure
High GrowthFCF CAGR
43.54%
Industry Style: Cyclical, Value, Infrastructure
High Growth