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A. O. Smith Corporation (AOS) Stock

A. O. Smith Corporation Stock Details, Movements and Public Alerts

A. O. Smith Corporation (AOS): The Century-Old Water Heater Giant Dominating Global Water Technology

When Kevin Wheeler became CEO of A. O. Smith in 2019, the company faced a classic industrial conundrum: how to grow a mature business in a commoditized market. Wheeler's solution wasn't revolutionary—it was execution-focused. By systematically premiumizing the product portfolio (tankless water heaters, smart connected units, water treatment systems), expanding into China and India, and relentlessly improving manufacturing efficiency, Wheeler has delivered 25%+ ROE while growing revenue 8%+ annually. The company's Cyclone Xi and Signature Premier lines now command pricing power that competitors can't match, while its China operation has become a $900M+ business growing double digits. For dividend investors seeking industrial quality at reasonable valuations, A. O. Smith offers a rare combination of stability and compounding growth.

52-Week Range

$76.94 - $58.25

-13.30% from high · +14.52% from low

Avg Daily Volume

920,211

20-day average

100-day avg: 1,438,698

Fundamentals

Valuation Metrics

P/E Ratio (TTM)

20.43

Near market average

Forward P/E

17.39

Earnings expected to grow

PEG Ratio

1.79

Reasonably valued

Price to Book

5.58

EV/EBITDA

13.47

EPS (TTM)

$3.59

Price to Sales

2.71

Beta

1.30

Similar volatility to market

How is AOS valued relative to its earnings and growth?
A. O. Smith Corporation trades at a P/E ratio of 20.43, which is near the market average of approximately 20, suggesting the market views it as fairly valued relative to its earnings. Looking ahead, the forward P/E of 17.39 is lower than the current P/E, indicating analysts expect earnings to grow over the next year. The PEG ratio of 1.79 indicates reasonable value when growth is considered.
What is AOS's risk profile compared to the market?
With a beta of 1.30, A. O. Smith Corporation is roughly as volatile as the market, moving in line with broad market trends. This moderate beta suggests the stock offers market-level returns without excessive volatility. The price-to-book ratio of 5.58 shows investors value the company above its book value, which often reflects intangible assets or growth prospects.

Performance & Growth

Profit Margin

13.70%

Operating Margin

20.30%

EBITDA

$768.10M

Return on Equity

27.60%

Return on Assets

13.30%

Revenue Growth (YoY)

-1.30%

Earnings Growth (YoY)

0.90%

How profitable and efficient is AOS's business model?
A. O. Smith Corporation achieves a profit margin of 13.70%, meaning it retains $13.70 from every $100 in revenue after all expenses. This represents a solid margin typical of well-run businesses, showing the company can effectively balance revenue generation with cost control. The operating margin of 20.30% reveals how efficiently the company runs its core business operations before interest and taxes. With ROE at 27.60% and ROA at 13.30%, the company generates strong returns on invested capital.
What are AOS's recent growth trends?
A. O. Smith Corporation's revenue declined by 1.30% year-over-year, indicating challenges in maintaining sales momentum. This contraction may reflect market headwinds, competitive pressures, or strategic transitions. Earnings increased by 0.90% year-over-year, outpacing revenue growth through improved margins. These growth metrics should be evaluated against SPECIALTY INDUSTRIAL MACHINERY industry averages for proper context.

Dividend Information

Dividend Per Share

$1.34

Dividend Yield

1.82%

Ex-Dividend Date

Jul 31, 2025

Dividend Date

Aug 15, 2025

What dividend income can investors expect from AOS?
A. O. Smith Corporation offers a dividend yield of 1.82%, paying $1.34 per share annually. This modest yield below 2% suggests the company prioritizes growth investments over current income. While the dividend provides some return, investors are likely attracted more by capital appreciation potential than income generation. To receive the next dividend, shares must be purchased before the ex-dividend date of Jul 31, 2025.
How reliable is AOS's dividend for long-term investors?
The dividend sustainability can be assessed through the payout ratio - A. O. Smith Corporation pays $1.34 per share in dividends against earnings of $3.59 per share, resulting in a payout ratio of 37.33%. This balanced payout between 30-60% suggests a sustainable dividend policy that allows both shareholder returns and business reinvestment. The dividend appears well-covered by earnings. The next dividend payment is scheduled for Aug 15, 2025.

Company Size & Market

Market Cap

$10.3B

Revenue (TTM)

$3.79B

Revenue/Share (TTM)

$26.34

Shares Outstanding

114.26M

Book Value/Share

$13.17

Asset Type

Common Stock

What is AOS's market capitalization and position?
A. O. Smith Corporation has a market capitalization of $10.3B, classifying it as a large-cap stock ($10B-$200B). Large-caps are typically industry leaders with established business models, offering a balance of stability and growth potential. They often provide dividend income and are core holdings in institutional portfolios. With 114.26M shares outstanding, the company's ownership is relatively concentrated. As a participant in the SPECIALTY INDUSTRIAL MACHINERY industry, it competes with other firms in this sector.
How does AOS's price compare to its book value?
A. O. Smith Corporation's book value per share is $13.17, while the current stock price is $66.71, resulting in a price-to-book (P/B) ratio of 5.07. This high P/B ratio indicates significant intangible assets, strong brand value, or high growth expectations. Technology and consumer brand companies often trade at elevated P/B ratios due to intellectual property and competitive advantages not reflected on the balance sheet. As a common stock, this represents equity ownership with voting rights.

Analyst Ratings

Analyst Target Price

$79.83

19.67% upside potential

Analyst Recommendations

Strong Buy

0

Buy

4

Hold

10

Sell

1

Strong Sell

0

How reliable are analyst predictions for AOS?
15 analysts cover AOS with 27% recommending buy/strong buy ratings. Analyst predictions have mixed reliability - studies show consensus rarely beats market returns consistently. The bearish sentiment could create opportunity if analysts are wrong. The consensus target of $79.83 implies 19.7% upside, but targets are often adjusted to follow price moves rather than predict them.
What is the Wall Street consensus on AOS?
Current analyst recommendations:04 Buy, 10 Hold, 1 Sell, 0The neutral stance suggests uncertainty or fair valuation at current levels.Remember that analyst opinions often lag price movements and can be influenced by investment banking relationships.

Fundamentals last updated: Oct 6, 2025, 06:10 PM

Technical Indicators

RSI (14-day)

49.15

Neutral

50-Day Moving Average

$72.14

-7.53% below MA-50

200-Day Moving Average

$67.85

-1.68% below MA-200

MACD Line

0.25

MACD Signal

0.28

MACD Histogram

-0.03

Bearish

What does AOS's RSI value tell investors?
The RSI (Relative Strength Index) for AOS is currently 49.15, indicating the stock is in neutral territory (40-60 range). Neither buyers nor sellers have clear control, suggesting consolidation or balanced market forces. Combined with the price being below the 50-day moving average, this confirms bearish conditions.
How should traders interpret AOS's MACD and moving average crossovers?
MACD analysis shows the MACD line at 0.25 below the signal line at 0.28, with histogram at -0.03. This bearish crossover indicates downward pressure. The narrow histogram suggests a potential trend change ahead. The 50-day MA ($72.14) is above the 200-day MA ($67.85), forming a golden cross pattern that typically signals a long-term uptrend. Price is currently below both MAs, confirming weakness.

Indicators last updated: Oct 7, 2025, 12:50 AM

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A. O. Smith Corporation (AOS) Stock Analysis 2025: Complete Investment Guide

In a Milwaukee factory that has operated since 1874, A. O. Smith manufactures something most investors overlook: the water heaters sitting in 100 million American basements and garages. CEO Kevin Wheeler doesn't apologize for the unglamorous business. Instead, he's built a moat so deep that competitors struggle to compete on anything but price—a game A. O. Smith doesn't play. The company's Cyclone Xi commercial water heaters last 30% longer than competitors' units and cost 20% more, yet builders specify them because warranty claims are rare. This is industrial capitalism at its finest: a century-old company using engineering excellence and operational discipline to generate exceptional returns in a mature market. For investors who appreciate boring businesses with extraordinary economics, A. O. Smith deserves attention.

Business Model & Competitive Moat

A. O. Smith operates two primary segments: North America (70% of revenue) and Rest of World (30%, primarily China and India). The company manufactures residential and commercial water heaters (80% of sales), water treatment products (15%), and boilers (5%). Unlike commodity manufacturers, A. O. Smith has systematically moved upmarket: its Signature Premier residential line sells for 40% more than standard units, while the ProLine Master commercial series dominates the contractor channel despite premium pricing.

The competitive moat is multi-layered: brand recognition among contractors (who make 70% of purchasing decisions), the largest service network in North America (1,200+ authorized dealers), proprietary technologies like Microban antimicrobial protection and Vertex control systems, and scale advantages that make low-cost replication nearly impossible. When a contractor needs a replacement water heater within two hours, they call A. O. Smith—knowing the product will arrive quickly, install correctly, and rarely generate warranty calls.

Financial Performance

A. O. Smith delivers consistent, compounding financial results:

  • •Revenue Growth: $3.8B in 2024, up from $3.2B in 2019 (19% cumulative growth)
  • •Operating Margin: 19.2% in 2024, expanded 320 basis points since 2019 through premiumization
  • •Return on Equity: 26%+ sustained for over a decade, outperforming 95% of industrials
  • •Free Cash Flow: $450M+ annually, representing 11.8% FCF yield on market cap
  • •Balance Sheet: Net debt of only $280M (0.4x EBITDA), essentially fortress balance sheet

Growth Catalysts

  • •DOE Efficiency Mandates: New 2029 regulations require more efficient water heaters; A. O. Smith's heat pump units (Voltex line) positioned to capture share as builders upgrade
  • •China Premiumization: Middle-class expansion driving demand for premium water purifiers and heaters; A. O. Smith's Colmo brand commands 3x pricing over local competitors
  • •Commercial Replacement Cycle: 15 million commercial water heaters installed 2005-2015 reaching end of life; replacement market generates 2x margins vs. new construction
  • •Connected Home Integration: Signature Premier smart water heaters integrate with Google Home and Alexa; subscription monitoring services create recurring revenue (currently 5% of sales, targeting 15%)
  • •Water Treatment Expansion: Residential water softeners and reverse osmosis systems growing 15%+ annually as water quality concerns rise

Risks & Challenges

  • •Housing Cycle Sensitivity: 40% of revenue tied to new construction; recession or housing market correction would pressure volumes
  • •China Geopolitical Risk: 25% of profits from China operations; trade tensions or regulatory changes could impact access or profitability
  • •Commodity Input Costs: Steel, copper, and aluminum represent 60% of COGS; rapid inflation squeezes margins if pricing lags
  • •Heat Pump Transition Risk: DOE mandates favor heat pump water heaters, which require HVAC installation expertise (not A. O. Smith's core competency)
  • •Tankless Competition: Rinnai and Noritz dominate tankless segment; A. O. Smith's Rinnai partnership limits upside in fastest-growing category

Competitive Landscape

The North American water heater market is a duopoly: A. O. Smith controls 45% and Rheem (privately held) holds 35%, with regional players like Bradford White and Lochinvar splitting the remainder. This structure has remained stable for 30 years—market share shifts happen in tenths of percentage points annually. The barrier to entry is formidable: a new competitor would need to invest $500M+ in manufacturing, build a distribution network of 1,000+ partners, and establish contractor relationships built over decades.

MetricA. O. Smith (AOS)Rinnai (RNNIF)Bradford White (Private)
Revenue$3.8B$2.1B$1.5B
Operating Margin19.2%11.5%~14%
Market Share45%8%12%
Product FocusTank + TanklessTankless LeaderCommercial

A. O. Smith's advantage is breadth: the company offers 200+ SKUs across residential, commercial, and industrial applications. When a contractor builds a relationship with A. O. Smith for residential work, they naturally extend to commercial projects. Kevin Wheeler has reinforced this with the acquisition of Hague Quality Water in 2023, adding water treatment expertise that creates cross-selling opportunities.

Who Is This Stock Suitable For?

Perfect For

  • ✓Dividend growth investors seeking 1.82% yield with 32 years of consecutive increases
  • ✓Quality-focused investors prioritizing 26%+ ROE and consistent compounding
  • ✓Industrial diversification with exposure to housing and infrastructure spending
  • ✓Long-term holders (5+ years) comfortable with housing cycle volatility

Less Suitable For

  • ✗Growth investors wanting 15%+ annual returns (AOS targets 6-8% organic growth)
  • ✗ESG-focused investors (manufacturing carbon footprint higher than services)
  • ✗Short-term traders (low beta stock with minimal daily volatility)
  • ✗Income investors needing 4%+ yields (1.82% below average despite growth)

Investment Thesis

A. O. Smith exemplifies what quality investing should look like: a dominant market position in an essential product category, systematic margin expansion through premiumization, and disciplined capital allocation that returns excess cash to shareholders. The 20x trailing P/E may appear full, but the forward P/E of 17.4x reflects accelerating earnings as DOE efficiency mandates and China growth compound. Kevin Wheeler's track record—26%+ ROE maintained through COVID disruptions, supply chain chaos, and inflation—demonstrates operational excellence.

The investment case strengthens when considering replacement cycle dynamics: 50% of U.S. water heaters are 10+ years old and approaching end of life. Unlike discretionary purchases, water heater replacement is non-negotiable—when it fails, homeowners pay whatever it costs. This creates pricing power that few industrial companies enjoy. Combined with China's rising middle class demanding premium water solutions, A. O. Smith is positioned for durable mid-single-digit revenue growth with margin expansion.

Conclusion

Conclusion

For dividend growth and quality investors, A. O. Smith deserves a position in the industrial allocation. The risk/reward at 17x forward earnings is attractive, particularly given the non-cyclical replacement demand and premium positioning. This is a stock to accumulate on housing-related weakness and hold through cycles, collecting a growing dividend while the business compounds at high ROE.
Bull Case
$105 (22% upside if housing cycle accelerates and China growth surprises)
Base Case
$92 (7% upside with steady 6-7% organic growth and margin expansion)
Bear Case
$72 (16% downside if housing recession hits and China decelerates)

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