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.


Snowflake Analysis

Excellent balance sheet established dividend payer.


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

0.4%

AOS

0.1%

US Building

-1.1%

US Market


1 Year Return

-17.1%

AOS

23.2%

US Building

17.9%

US Market

Return vs Industry: AOS underperformed the US Building industry which returned 23.2% over the past year.

Return vs Market: AOS underperformed the US Market which returned 17.9% over the past year.


Shareholder returns

AOSIndustryMarket
7 Day0.4%0.1%-1.1%
30 Day-2.9%2.3%1.4%
90 Day-9.6%5.4%6.9%
1 Year-15.5%-17.1%25.0%23.2%20.3%17.9%
3 Year-8.8%-12.8%27.8%21.9%47.8%38.3%
5 Year49.8%39.9%51.3%31.6%71.9%53.0%

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?

19.87x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: AOS ($44.09) is trading above our estimate of fair value ($43.18)

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 (19.9x) compared to the Building industry average (23x).

PE vs Market: AOS is poor value based on its PE Ratio (19.9x) compared to the US market (18.2x).


Price to Earnings Growth Ratio

PEG Ratio: AOS is poor value based on its PEG Ratio (2.4x)


Price to Book Ratio

PB vs Industry: AOS is overvalued based on its PB Ratio (4.3x) compared to the US Building industry average (2.6x).


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?

8.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AOS's forecast earnings growth (8.3% per year) is above the savings rate (1.7%).

Earnings vs Market: AOS's earnings (8.3% per year) are forecast to grow slower than the US market (14.1% per year).

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

Revenue vs Market: AOS's revenue (3.1% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: AOS's revenue (3.1% 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?

11.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AOS has high quality earnings.

Growing Profit Margin: AOS's current net profit margins (12.4%) are lower than last year (13.9%).


Past Earnings Growth Analysis

Earnings Trend: AOS's earnings have grown by 11.5% per year over the past 5 years.

Accelerating Growth: AOS's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: AOS had negative earnings growth (-16.7%) over the past year, making it difficult to compare to the Building industry average (-15.5%).


Return on Equity

High ROE: AOS's Return on Equity (22.2%) 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 ($766.5M).

Long Term Liabilities: AOS's short term assets ($1.5B) exceed its long term liabilities ($624.7M).


Debt to Equity History and Analysis

Debt Level: AOS's debt to equity ratio (16.3%) is considered satisfactory.

Reducing Debt: AOS's debt to equity ratio has increased from 16.3% to 16.3% over the past 5 years.

Debt Coverage: AOS's debt is well covered by operating cash flow (167.8%).

Interest Coverage: AOS's interest payments on its debt are well covered by EBIT (42.3x 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 5.5x debt).


Next Steps

Dividend

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

2.18%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: AOS's dividend (2.18%) is higher than the bottom 25% of dividend payers in the US market (1.45%).

High Dividend: AOS's dividend (2.18%) is low compared to the top 25% of dividend payers in the US market (3.73%).


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 (40.6%), AOS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AOS's dividends in 3 years are forecast to be well covered by earnings (38.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

6.5yrs

Average management tenure


CEO

Kevin Wheeler (59yo)

1.4yrs

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 ($USD3.45M) is below average for companies of similar size in the US market ($USD6.39M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Ajita Rajendra
Executive Chairman5.8yrsUS$6.79m0.22% $15.9m
Kevin Wheeler
President1.4yrsUS$3.45m0.021% $1.5m
James Stern
Executive VP12.7yrsUS$1.90m0.097% $7.0m
Mark Petrarca
Senior Vice President of Human Resources & Public Affairs14.1yrsUS$1.41m0.054% $3.9m
Ding Wei
Senior Vice President0yrsUS$1.90m0.0065% $463.9k
Charles Lauber
Executive VP & CFO0.8yrsno data0.016% $1.1m
Paul Dana
Senior Vice President of Global Operations1.1yrsno data0.0030% $218.6k
Robert Heideman
Senior VP & CTO9.2yrsno data0.0077% $551.6k
Peter Martineau
Senior VP & Chief Information Officer3.8yrsno data0.0032% $230.1k
Patricia Ackerman
Senior VP of Investor Relations11.4yrsno data0.0018% $129.4k

6.5yrs

Average Tenure

56yo

Average Age

Experienced Management: AOS's management team is seasoned and experienced (6.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Ajita Rajendra
Executive Chairman5.8yrsUS$6.79m0.22% $15.9m
Kevin Wheeler
President1.4yrsUS$3.45m0.021% $1.5m
Paul Jones
Independent Director15.2yrsUS$216.06k0.11% $8.0m
Gene Wulf
Lead Director1.8yrsUS$247.31k0.069% $5.0m
Ronald Brown
Independent Director19.1yrsUS$225.56k0.022% $1.6m
Bruce Smith
Independent Director25.1yrsUS$243.56k0.15% $10.5m
Idelle Wolf
Independent Director15.1yrsUS$216.06k0.033% $2.4m
Mark Smith
Independent Director19.1yrsUS$216.06k0.24% $17.0m
William Greubel
Independent Director14.1yrsUS$225.56kno data
Ilham Kadri
Independent Director3.2yrsUS$216.06k0.0047% $335.8k

14.6yrs

Average Tenure

66.5yo

Average Age

Experienced Board: AOS's board of directors are seasoned and experienced ( 14.6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

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$7.192b
  • 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
A1OS34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COMBRBRLDec 2019

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 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; residential and commercial boilers for space heating applications in hospitals, schools, hotels, and other commercial buildings; and water treatment products, including on-the-go filtration bottles, point-of-use carbon and reverse osmosis products, point-of-entry water softeners, and whole-home water filtration 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, combi-boilers, solar tank units, and air purification products. The company offers its products primarily under the A. O. Smith and State 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. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/23 02:02
End of Day Share Price2020/02/21 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.