AOS

A.O. Smith

Fundamental data last updated:April 13, 2026

company profile

SECTOR

Industrials

industry

Specialty Industrial Machinery

Exchange

NYSE

County of HQ

United States

Next Earnings Date

04/30/26

Business Summary

A.O. Smith generates cash by manufacturing and selling specialized industrial and water heating equipment, monetizing both initial unit sales and replacement demand cycles. Its moat is rooted in brand equity, distribution scale, and manufacturing efficiency, which allow it to sustain a 29.40% operating margin in a competitive industrial category. High 26.80% ROIC suggests disciplined capital allocation and strong unit economics. The combination of conservative leverage and consistent profitability creates a durable cash-generating engine capable of compounding value through cycles.

VALUATION

P/E

17.1

Market Cap ($M USD)

$9,112

Forward P/E

15.2

PEG

2.6

PRICE TO SALES

2.4

PRICE TO BOOK

4.9

EV / EBITDA

11.2

5-Year Average P/E

DIVIDEND

Yield

2.10%

Annual Payout

$1.40

Payout Ratio

35.70%

Consecutive Years of Dividend Growth

10+

5-Year Dividend Growth Rate

6.70%

Financial Health & Profitability

Earnings Per Share

$3.87

Next Year EPS Growth Estimate

$4.35

Next Year Revenue Growth Estimate

3.80%

Return on Equity (ROE)

29.40%

Operating Margin

19.00%

Debt-to-Equity

0.1

Piotroski F-Score

8

Altman Z-Score

8.2

Return on Invested Capital (ROIC)

26.80%%

Current Ratio

1.5

Quick Ratio

Gainseekers Quantitative Analysis

Summary

At 17.1x earnings and 15.2x forward earnings, AOS trades at a modest multiple for a company generating 26.80% ROIC and a 29.40% operating margin. The 8.2 Altman Z-Score signals extremely low bankruptcy risk, and a Piotroski F-Score of 8 reinforces balance sheet and earnings quality strength. However, the 2.6 forward PEG suggests growth is not particularly cheap relative to expectations, meaning this is not a screaming bargain but rather a high-quality industrial compounder priced reasonably. The market is not deeply mispricing it, but it may be underappreciating the durability implied by its balance sheet strength and capital efficiency. This is a financially solid company trading at a fair-to-slightly-attractive valuation rather than a distressed opportunity.

AI Exposure / Tech Reliance

As a Specialty Industrial Machinery company, AOS operates in a segment that increasingly integrates automation, controls, and efficiency technologies into equipment systems. Industrial machinery businesses that embrace smart manufacturing and energy-efficient design are structurally better positioned in a digitizing economy. While not a pure AI play, its sector naturally benefits from incremental automation and process optimization trends.

The Bull Case

This is the kind of name disciplined GARP investors accumulate during periods of indifference. A 26.80% ROIC paired with a 29.40% operating margin signals a business with pricing power and operational discipline, not a commoditized industrial operator. The Piotroski F-Score of 8 confirms strong fundamental momentum and accounting quality, while the Altman Z-Score of 8.2 eliminates balance sheet anxiety. Debt/Equity at 19.00% is conservative, and institutional ownership at $80.40 reflects smart money participation. At 15.2x forward earnings with positive forward sales growth indicated, you’re paying a reasonable multiple for a high-return, financially secure industrial franchise.

The Bear Case

The most glaring issue is growth-adjusted valuation: a forward PEG of 2.6 implies investors are paying up relative to projected expansion. Return on Equity at 3.80% is underwhelming compared to the 26.80% ROIC, raising questions about capital structure efficiency or earnings normalization. Short interest at 6.70% is not extreme but high enough to indicate a meaningful skeptical cohort. The payout metrics are inconsistent, and with a TTM yield of 0.1 alongside a 2.10% dividend per share figure and a payout ratio listed as $1.40, capital return clarity is questionable. If growth stalls or margins compress, this multiple could de-rate quickly given the lack of explosive forward expansion implied by the PEG.

Market Sentiment & Smart Money

Short Interest %

6.40%

Analyst Consensus

2.54

Average Analyst Price Target

$80.40

Institutional Ownership %

94.60%

1-Year Beta

0.89

Insider Buying % (6 Mo)

0.40%%

Distance to 52-Week High

80.50%%

Distance to 52-Week Low

107.50%%