Quality Investor

A. O. Smith Corporation

Rank #131Value

AOS · NYSE · Industrials

A. O. Smith Corporation (AOS) — Rank #131 by gross profitability (GP/assets 0.41) · ROE 29.7% · Piotroski F-Score 8 / 9.

As-of 2026-09-15 · CIK 0000091142 · all metrics point-in-time as of the filing date.

About

A.

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O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks, and water treatment products in North America, China, Europe, and India. The company offers water heaters for residences, restaurants, hotels, office buildings, laundries, car washes, and small businesses; boilers for hospitals, schools, hotels, homes, apartments, and condominiums, and other large commercial buildings; and water treatment products comprising point-of-entry water softeners, well water solutions, and whole-home water filtration products, and point-of-use carbon and reverse osmosis products for residences, restaurants, hotels, and offices. It also provides commercial water treatment and filtration products; expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, and related products and parts; and electric wall-hung, gas tankless, combi-boiler, and heat pump and solar water heaters. The company offers its products under the A. O. Smith, State, Lochinvar, Hague, Water-Right, Master Water, Atlantic Filter, Impact, and Water Tec brands. It distributes its products through independent wholesale plumbing distributors, as well as to retail channels consisting of hardware and home center chains, and manufacturer representative firms, as well as offers Aquasana branded products directly to consumers through e-commerce channels; and A. O. Smith branded water treatment products through dealer network and Amazon. A. O.

Smith Corporation was founded in 1874 and is headquartered in Milwaukee, Wisconsin.

Industry
Specialty Industrial Machinery
Sector
Industrials
State
DE
Filer Category
Large accelerated filer
Fiscal Year End
December 31

Price History

AOS-12.3% · -2.6% CAGRSPY+80.3% · +12.5% CAGR

Company Snapshot

P/E and dividend yield are the primary valuation lenses for mature businesses.

Market Cap

$7.76B

P/E (annual)

14.8

P/S (annual)

2.0

P/B

4.2

P/OCF (annual)

12.6

Shareholder Yield

6.0%

Employees

11,500

Industry

Specialty Industrial Machinery

Exchange

NYSE

Signal Flags

3 green
Revenue growth acceleratingGrowth rate increasing year over year
Operating leverage expandingOperating income growing faster than revenue
Sequential beat (rev + EPS)Both revenue and EPS exceeded prior quarter — 2-quarter streak

Quality Profile

Profitability

1/1 pass
GP / assets
0.41
Return on equity
29.7%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
0.98
Current ratio
1.59×
Net cash
-$456.20M

Cash Flow

2/3 pass
Positive FCF
PASS
Cash-backed earnings
WARN
Accruals healthy
PASS
SBC / revenue
0.4%

Growth

2/2 pass
Revenue growth
0.3%
Piotroski F-Score
8 / 9
Share dilution
-3.5%

Terry Smith quality gate

Passes 3/5 Terry Smith thresholds

What Growth Is Priced In

Implied revenue growth (10Y)

3.6%

incredible deal

The annual FCF growth rate today's price requires over a 10-year horizon (discount rate 10%, terminal growth 2.5%).

Buyback tailwind: -3.5% — per-share value needs a total required return of 0.1% once share-count change is priced in.

vs. own 6-year median revenue growth: 1.5%

priced above its own history

Cost-of-equity sensitivity (implied growth at different discount rates)

r = 8%

-0.4%

r = 10% (base)

3.6%

r = 12%

7.2%

Net debt / market cap: 5.6%

Base FCF: $546M3Y mean FCF: $563.2M

Valuation History

Current multiple vs historical range at each filing date. Band spans 25th-75th percentile.

P / E

Price / diluted EPS

20.9xCheap
19.3xmed 22.9x44.7x

P / S

Price / revenue per share

3.0xFair
2.4xmed 3.1x3.4x

P / B

Price / book value per share

6.1xFair
4.3xmed 6.0x6.5x

P / GP

Price / gross profit per share

7.7xFair
6.0xmed 8.0x8.9x

P / FCF

Price / free cash flow per share

20.9xFair
18.2xmed 22.7x38.8x

Dividend yield and payout ratio are the primary reads at this stage (trailing P/E — see valuation above).

Profitability

Gross profitability (GP / assets)

0.41

Primary signal (Novy-Marx).

83rd pctl of 43 SIC 36 peers

Return on equity

29.7%

Gross margin

38.8%

29th pctl of 43 SIC 36 peers

Revenue growth (YoY)

0.3%

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2022202320242025
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

0.7%

Revenue CAGR (5Y)

5.8%

Earnings CAGR (3Y)

32.3%

FCF CAGR (3Y)

19.4%

Anti-fragile safety

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

0.98

28th pctl of 41 SIC 36 peers (best = lowest)

Current ratio

1.59×

10th pctl of 43 SIC 36 peers

Quick ratio

0.98×

Net cash

-$456.20M

Cash & equivalents minus total debt.

Cash-flow health

Free cash flow

$546.00M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF / net income

-0.00

Cash-backing of earnings.

FCF/NI divergence

Unfavorable divergence (yellow flag).

WARN

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

0.4%

Stock-based comp intensity.

Dividend safety

Composite score

4.2 / 5

Strong
Payout ratio
35.8%4/5 Strong
FCF coverage
2.79×4/5 Strong
Dividend growth streak
10 yr5/5 Strong
Balance-sheet health
D/E 0.98 · IC 53.97×4/5 Strong

Piotroski F-Score

F-Score

8 / 9

Fundamental-strength score (0-9).

Lifecycle Phase History

20202025
Value
Op. Leverage
Capital Return