NYSE:AOS

Stock Analysis Report

Executive Summary

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, tanks, and water treatment products in North America, China, Europe, and India.

Rewards

PE ratio (19.3x) is below the Building industry average (21.9x)

Earnings are forecast to grow 7.83% per year

Earnings grew by 18.9% over the past year

Pays a reliable dividend of 2.05%

Risk Analysis

No risks detected for AOS from our risk checks.


Snowflake Analysis

Outstanding track record with excellent balance sheet and pays a dividend.


Similar Companies

Share Price & News

How has A. O. Smith's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: AOS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.3%

AOS

-0.1%

US Building

0.03%

US Market


1 Year Return

6.6%

AOS

31.5%

US Building

18.6%

US Market

Return vs Industry: AOS underperformed the US Building industry which returned 31.5% over the past year.

Return vs Market: AOS underperformed the US Market which returned 18.6% over the past year.


Shareholder returns

AOSIndustryMarket
7 Day-3.3%-0.1%0.03%
30 Day-10.2%1.1%1.7%
90 Day-4.7%9.2%5.7%
1 Year8.5%6.6%33.6%31.5%21.1%18.6%
3 Year-4.0%-8.0%23.7%17.8%45.6%36.2%
5 Year86.8%74.9%60.0%39.6%71.1%52.3%

Price Volatility Vs. Market

How volatile is A. O. Smith's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is A. O. Smith undervalued compared to its fair value and its price relative to the market?

19.3x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: AOS ($46.79) is trading above our estimate of fair value ($42.25)

Significantly Below Fair Value: AOS is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: AOS is good value based on its PE Ratio (19.3x) compared to the Building industry average (21.9x).

PE vs Market: AOS is poor value based on its PE Ratio (19.3x) compared to the US market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: AOS is poor value based on its PEG Ratio (2.5x)


Price to Book Ratio

PB vs Industry: AOS is overvalued based on its PB Ratio (4.6x) compared to the US Building industry average (2.5x).


Next Steps

Future Growth

How is A. O. Smith forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

7.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AOS's forecast earnings growth (7.8% per year) is above the savings rate (1.7%).

Earnings vs Market: AOS's earnings (7.8% per year) are forecast to grow slower than the US market (14.2% per year).

High Growth Earnings: AOS's earnings are forecast to grow, but not significantly.

Revenue vs Market: AOS's revenue (3.4% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: AOS's revenue (3.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if AOS's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has A. O. Smith performed over the past 5 years?

13.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AOS has high quality earnings.

Growing Profit Margin: AOS's current net profit margins (13.3%) are higher than last year (10.8%).


Past Earnings Growth Analysis

Earnings Trend: AOS's earnings have grown by 13.1% per year over the past 5 years.

Accelerating Growth: AOS's earnings growth over the past year (18.9%) exceeds its 5-year average (13.1% per year).

Earnings vs Industry: AOS earnings growth over the past year (18.9%) exceeded the Building industry -5.5%.


Return on Equity

High ROE: AOS's Return on Equity (24.5%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is A. O. Smith's financial position?


Financial Position Analysis

Short Term Liabilities: AOS's short term assets ($1.5B) exceed its short term liabilities ($730.4M).

Long Term Liabilities: AOS's short term assets ($1.5B) exceed its long term liabilities ($681.3M).


Debt to Equity History and Analysis

Debt Level: AOS's debt to equity ratio (19.3%) is considered satisfactory.

Reducing Debt: AOS's debt to equity ratio has increased from 18.5% to 19.3% over the past 5 years.

Debt Coverage: AOS's debt is well covered by operating cash flow (137.8%).

Interest Coverage: AOS's interest payments on its debt are well covered by EBIT (49.6x coverage).


Balance Sheet

Inventory Level: AOS has a high level of physical assets or inventory.

Debt Coverage by Assets: AOS's debt is covered by short term assets (assets are 4.7x debt).


Next Steps

Dividend

What is A. O. Smith's current dividend yield, its reliability and sustainability?

2.05%

Current Dividend Yield


Dividend Yield vs Market

company2.1%marketbottom25%1.4%markettop25%3.7%industryaverage1.7%forecastin3Years2.1%

Current dividend yield vs market & industry

Notable Dividend: AOS's dividend (2.05%) is higher than the bottom 25% of dividend payers in the US market (1.42%).

High Dividend: AOS's dividend (2.05%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

Stable Dividend: AOS's dividends per share have been stable in the past 10 years.

Growing Dividend: AOS's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (36.3%), AOS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of A. O. Smith's salary, the management and board of directors tenure and is there insider trading?

6.3yrs

Average management tenure


CEO

Kevin Wheeler (59yo)

1.3yrs

Tenure

US$3,452,974

Compensation

Mr. Kevin J. Wheeler is Chief Executive Officer of A. O. Smith Corporation since September 1, 2018. He has been President of A. O. Smith Corporation since May 18, 2017 and served its Senior Vice President  ...


CEO Compensation Analysis

Compensation vs Market: Kevin's total compensation ($USD3.45M) is below average for companies of similar size in the US market ($USD6.81M).

Compensation vs Earnings: Kevin's compensation has increased by more than 20% in the past year.


Management Age and Tenure

6.3yrs

Average Tenure

56yo

Average Age

Experienced Management: AOS's management team is seasoned and experienced (6.3 years average tenure).


Board Age and Tenure

14.4yrs

Average Tenure

66.5yo

Average Age

Experienced Board: AOS's board of directors are seasoned and experienced ( 14.4 years average tenure).


Insider Trading

Insider Buying: AOS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$250,35112 Nov 19
Mark Smith
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares4,820
Max PriceUS$51.94
SellUS$819,10011 Sep 19
Ajita Rajendra
EntityIndividual
Role
Chairman of the Board
Executive Chairman
Shares16,556
Max PriceUS$49.47
SellUS$57,88927 Aug 19
Helen Gurholt
EntityIndividual
Shares1,263.46
Max PriceUS$45.82
SellUS$49,50009 May 19
Paul Jones
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,000
Max PriceUS$49.50
SellUS$268,10106 May 19
Bruce Smith
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares5,000
Max PriceUS$53.62
SellUS$419,60202 May 19
Ronald Brown
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares8,000
Max PriceUS$52.45
SellUS$980,00008 Feb 19
Paul Jones
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares20,000
Max PriceUS$49.00

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Ajita Rajendra (67yo)

    Executive Chairman

    • Tenure: 5.7yrs
    • Compensation: US$6.79m
  • Mark Petrarca (55yo)

    Senior Vice President of Human Resources & Public Affairs

    • Tenure: 13.9yrs
    • Compensation: US$1.41m
  • Jim Stern (56yo)

    Executive VP

    • Tenure: 12.5yrs
    • Compensation: US$1.90m
  • Pat Ackerman (58yo)

    Senior VP of Investor Relations

    • Tenure: 11.3yrs
  • Paul Dana (56yo)

    Senior Vice President of Global Operations

    • Tenure: 0.9yrs
  • Kevin Wheeler (59yo)

    President

    • Tenure: 1.3yrs
    • Compensation: US$3.45m
  • Bob Heideman (52yo)

    Senior VP & CTO

    • Tenure: 9yrs
  • Chuck Lauber (56yo)

    Executive VP & CFO

    • Tenure: 0.6yrs
  • Ding Wei (56yo)

    Senior Vice President

    • Tenure: 0yrs
    • Compensation: US$1.90m
  • Peter Martineau (64yo)

    Senior VP & Chief Information Officer

    • Tenure: 3.7yrs

Board Members

  • Paul Jones (70yo)

    Independent Director

    • Tenure: 15yrs
    • Compensation: US$216.06k
  • Gene Wulf (68yo)

    Lead Director

    • Tenure: 1.7yrs
    • Compensation: US$247.31k
  • Ron Brown (66yo)

    Independent Director

    • Tenure: 18.9yrs
    • Compensation: US$225.56k
  • Ajita Rajendra (67yo)

    Executive Chairman

    • Tenure: 5.7yrs
    • Compensation: US$6.79m
  • Bruce Smith (70yo)

    Independent Director

    • Tenure: 24.9yrs
    • Compensation: US$243.56k
  • Idelle Wolf (66yo)

    Independent Director

    • Tenure: 14.9yrs
    • Compensation: US$216.06k
  • Mark Smith (57yo)

    Independent Director

    • Tenure: 18.9yrs
    • Compensation: US$216.06k
  • Bill Greubel (67yo)

    Independent Director

    • Tenure: 13.9yrs
    • Compensation: US$225.56k
  • Kevin Wheeler (59yo)

    President

    • Tenure: 1.3yrs
    • Compensation: US$3.45m
  • Ilham Kadri (50yo)

    Independent Director

    • Tenure: 3yrs
    • Compensation: US$216.06k

Company Information

A. O. Smith Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: A. O. Smith Corporation
  • Ticker: AOS
  • Exchange: NYSE
  • Founded: 1874
  • Industry: Building Products
  • Sector: Capital Goods
  • Market Cap: US$7.617b
  • Shares outstanding: 163.11m
  • Website: https://www.aosmith.com

Number of Employees


Location

  • A. O. Smith Corporation
  • 11270 West Park Place
  • Suite 170
  • Milwaukee
  • Wisconsin
  • 53224
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AOSNYSE (New York Stock Exchange)YesCommon StockUSUSDApr 2009
3SMDB (Deutsche Boerse AG)YesCommon StockDEEURApr 2009
0L7ALSE (London Stock Exchange)YesCommon StockGBUSDApr 2009
AOS *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNApr 2009

Biography

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, tanks, and water treatment products in North America, China, Europe, and India. It opera ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/08 00:19
End of Day Share Price2019/12/06 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.