A Look at A. O. Smith’s Valuation Following Q3 Earnings Growth and Updated 2025 Outlook

A. O. Smith (AOS) posted its third quarter earnings, revealing higher sales and net income compared to last year. The company also revised its full-year 2025 outlook and provided an update on recent share repurchases.

See our latest analysis for A. O. Smith.

Despite mixed quarterly news and a slight dip in guidance, A. O. Smith’s ongoing share buybacks and exploration of new growth opportunities have kept investors engaged. The latest share price of $66.17 reflects a cautious but steady sentiment. While the one-year total shareholder return is down 10.1%, long-term holders have seen gains of 28.4% over five years. Momentum has softened; however, the company’s acquisition ambitions and buyback activity indicate management’s confidence in future growth.

If recent developments have you curious about where else value and growth might intersect, now is the perfect time to explore fast growing stocks with high insider ownership.

But with shares trading below analyst price targets and the company posting steady growth numbers, is there real value to be found here, or has the market already priced in all future upside?

Most Popular Narrative: 15.4% Undervalued

A. O. Smith’s narrative fair value of $78.18 sits notably above the latest share price of $66.17, highlighting an optimism not presently captured by the market. This view is built on strategic bets and operational moves that could reshape value if realized.

Strong long-term demand remains as urbanization and rising middle classes in developing regions, notably India and emerging markets, continue to drive higher adoption of residential and commercial water heating and treatment solutions. Recent double-digit sales growth in India and ongoing water treatment expansion point to meaningful future revenue potential, especially as portfolio diversification lessens reliance on mature North American markets.

Read the complete narrative.

What’s fueling this valuation? It’s not just global expansion. The blend of recurring tech-enabled revenues and a transformation in market mix is at the heart of this calculation. Which segments will pull ahead, and by how much? Unlock the numbers behind this bold projection. One surprise could shift your outlook entirely.

Result: Fair Value of $78.18 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in China and overreliance on North American replacements could challenge the bullish outlook if demand does not rebound meaningfully.

Find out about the key risks to this A. O. Smith narrative.

Build Your Own A. O. Smith Narrative

If you see things differently or want to dive deep into the numbers on your own terms, crafting a personalized narrative takes just a few minutes. Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding A. O. Smith.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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