# Smith AO (AOS.US)

Canonical: https://gigainvestors.com/s/AOS

Analysis as of: 2026-10-16T07:36:23.518Z. Financial observations: FY1996–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

A wonderful business at a fair price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: yes.

Share price: $59.47 per share; close as of 2026-10-15.

Estimated value: low $55.61 per share, central $78.72 per share, high $92.30 per share. Buy at or below the central value $78.72 per share. Valuation as of 2026-10-16T07:36:23.518Z; scenarios are not confidence intervals.

Expected annual return: 12.2% at the stated quote. About 12.2% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 4 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 4

- Years with a net loss: 0

- Operating margin variation: 0.07×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.17×

- FY2018: 0.17×

- FY2019: 0.16×

- FY2020: 0.15×

- FY2021: 0.17×

- FY2022: 0.18×

- FY2023: 0.20×

- FY2024: 0.19×

- FY2025: 0.19×

- LTM to Jun 2026: 0.18×

### moat: pass

- ROIC, median of available years: 49.9%

- ROIC, second-lowest year: 41.0%

- Typical minus recent gross margin: -0.0 pp

- Typical gross margin (annual median): 38.6%

- Recent gross margin (lower of latest and 3-year median): 38.6%

- Years with nonpositive capital: 0

- Capital spending / revenue: 2.0%

- ROIC including acquisitions, ten-year median: 27.9%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 47.1%

- FY2018: 56.3%

- FY2019: 41.0%

- FY2020: 45.6%

- FY2021: 59.9%

- FY2022: 65.0%

- FY2023: 57.3%

- FY2024: 51.4%

- FY2025: 48.5%

- LTM to Jun 2026: 36.5%

### economics: pass

- Owner earnings / net income, 5-yr: 1.00×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $2.4B

- Net income, five-year total: $2.4B

- Return on incremental invested capital: 100.6%

- Working capital / revenue, annual change: 0.3 pp

- Working capital / revenue, change between three-year averages: 2.1 pp

- Working capital / revenue, final three-year average: 13.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.01×

- FY2022: 1.03×

- FY2023: 1.01×

- FY2024: 0.95×

- FY2025: 1.03×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 55.2% vs 51.4%

- Per-share earnings: 1.70 to 3.69 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -2.3%

- Ordinary dilution, 5-year annual growth: -2.7%

- Market cap gain: $1.1B

- Cumulative retained earnings: $2.4B

- Diluted shares, 10-year annual growth: -2.3%

- Diluted shares, 5-year annual growth: -2.7%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 10.2%

- Per-share value change: $1.99

- Per-share value, starting three-year median: $1.70

- Per-share value, ending three-year median: $3.69

- Buybacks concentrated in cheaper years (correlation): 0.27

- Average buyback yield: 2.7%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $429M

- Cumulative net income, 10 years: $4.1B

- ROIC, first three-year median: 55.2%

- ROIC, last three-year median: 51.4%

Chart: Earnings per share; fiscal year observations.

- FY2016: $1.85

- FY2017: $1.70

- FY2018: $2.58

- FY2019: $2.22

- FY2020: $2.12

- FY2021: $3.02

- FY2022: $1.51

- FY2023: $3.69

- FY2024: $3.63

- FY2025: $3.85

### accounting: pass

- Sloan accruals: -2.2%

- Receivables to sales index (DSRI): 1.07×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 2.2%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.13×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.58×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -4.2%

- FY2017: -0.9%

- FY2018: -0.2%

- FY2019: -2.8%

- FY2020: -6.9%

- FY2021: -4.4%

- FY2022: -4.7%

- FY2023: -3.5%

- FY2024: -1.5%

- FY2025: -2.2%

## Holders

## Price story

Down 34% since Sep 2024 · "AOS Q1 Deep Dive: Margin Pressure and Macroeconomic Headwinds Shape Water Heater Maker’s Outlook" (finance.yahoo.com, May 2026) · sales -0.7%

Story as of 2026-10-16T10:00:07.340Z; price observation 2026-10-15.

Price needs cash profits to grow 3.4% a year for ten years

- 2025-07-24: A.O. Smith lifts annual profit forecast, considers China partnership ([ca.finance.yahoo.com](https://ca.finance.yahoo.com/news/o-smith-lifts-annual-profit-145223402.html))

- 2025-12-29: A. O. Smith: Margin Stability and Water Technology Expansion in a Soft Demand Cycle ([finance.yahoo.com](https://finance.yahoo.com/news/o-smith-margin-stability-water-155340842.html))

- 2026-03-30: A. O. Smith Faces Flat Sales And Softer Returns On Capital ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/o-smith-faces-flat-sales-120535234.html))

- 2026-04-30: A.  O. Smith Reports First Quarter 2026 Results and Lowers Full Year 2026 Outlook ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/o-smith-reports-first-quarter-105500979.html))

- 2026-05-03: AOS Q1 Deep Dive: Margin Pressure and Macroeconomic Headwinds Shape Water Heater Maker’s Outlook ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/aos-q1-deep-dive-margin-001255060.html))

- 2026-08-01: AOS Q2 Deep Dive: Margin Compression and China Weakness Offset North America Growth ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/aos-q2-deep-dive-margin-021957226.html))

### Sales · FY2025–2026

sales -0.7%; source https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm; observed 2026-02-10.

- FY2017: $3.0B 

- FY2018: $3.2B 

- FY2019: $3.0B 

- FY2020: $2.9B 

- FY2021: $3.5B 

- FY2022: $3.8B 

- FY2023: $3.9B 

- FY2024: $3.8B 

- FY2025: $3.8B 

- FY2026: $3.8B 

### Gross margin · FY2026

gross margin 38.6%; source https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm; observed 2026-02-10.

- FY2017: 41.3% 

- FY2018: 41.0% 

- FY2019: 39.5% 

- FY2020: 38.3% 

- FY2021: 37.0% 

- FY2022: 35.4% 

- FY2023: 38.5% 

- FY2024: 38.1% 

- FY2025: 38.8% 

- FY2026: 38.6% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in specialty industrial machinery; annual sales are USD 3.8 billion.

- Source: https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm (filed 2026-02-10); FY2025: revenue 3830200000; grossProfit 1487400000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); AOS.US: A. 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.

### Why customers stay

Margins ranged from 38.1% to 38.8% during 2023–25; it earns 49.9% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2023: grossProfit / revenue = 38.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2024: grossProfit / revenue = 38.1%.

- Source: https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm (filed 2026-02-10); FY2025: grossProfit / revenue = 38.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); 10-year return on capital observations [[2017,0.47081129974951297],[2018,0.5629706676977854],[2019,0.41009552631027213],[2020,0.4564674741700123],[2021,0.599197396761735],[2022,0.650182607837331],[2023,0.5731312107965455],[2024,0.5135795679150267],[2025,0.4850851778950187],[2026,0.3646738715686042]]; median 0.4993323729050227. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Our boiler sales grew eight percent in 2025 primarily due to higher volumes and pricing benefits.

- Source: https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm (filed 2026-02-10); Combining all of these factors, we expect o nitiatives. Our boiler sales grew eight percent in 2025 primarily due to higher volumes and pricing benefits. We expect our boiler sales to grow between six and eight percent in 2026 due to carryover pricing benefits and continued demand for our commercial high efficiency condensing gas boilers.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back USD 400.8 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2016: growth capex 15600000; upkeep 65100000; owner earnings 326500000. Growth capex / owner earnings = 0.04777947932618683.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2017: growth capex 24100000; upkeep 70100000; owner earnings 296500000. Growth capex / owner earnings = 0.08128161888701518.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2018: growth capex 13300000; upkeep 71900000; owner earnings 444200000. Growth capex / owner earnings = 0.029941467807294012.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2019: growth capex 0; upkeep 64400000; owner earnings 383900000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2020: growth capex 0; upkeep 56800000; owner earnings 368100000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2021: growth capex 0; upkeep 75100000; owner earnings 489900000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2022: growth capex 0; upkeep 70300000; owner earnings 242300000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2023: growth capex 0; upkeep 72600000; owner earnings 562300000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); FY2024: growth capex 0; upkeep 108000000; owner earnings 504400000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm (filed 2026-02-10); FY2025: growth capex 0; upkeep 70800000; owner earnings 560500000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); Dividend observations: [[2016,84200000],[2017,96900000],[2018,130100000],[2019,149200000],[2020,158700000],[2021,170100000],[2022,177200000],[2023,183500000],[2024,190400000],[2025,195700000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm (filed 2026-02-10); FY2025: cash repurchases 400800000 USD.

### Are managers owners

Insiders own 0.5% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); AOS.US SharesStats.PercentInsiders = 0.462 percentage points; cache date 2026-10-16.

### What could break it

"Business, Operational, and Strategic Risks" (SEC filing, Feb 2026)

- Source: https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm (filed 2026-02-10); Business, Operational, and Strategic Risks

### What the price says

The price assumes cash profits grow 3.4% yearly over ten years; actual growth was 9.6%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-10); Ten-year compound average after fade. Initial solved rate 0.03702085585343179. Price 59.47; FX 1; discount 0.1; same compounder ten-year fade to terminal 0.03. FY2015 owner earnings/share 1.5803658784426586 → FY2025 3.949551717072013. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $45.17 per share

- 2016-11: $48.63 per share

- 2016-12: $47.35 per share

- 2017-01: $48.75 per share

- 2017-02: $50.36 per share

- 2017-03: $51.16 per share

- 2017-04: $53.88 per share

- 2017-05: $54.87 per share

- 2017-06: $56.33 per share

- 2017-07: $53.55 per share

- 2017-08: $55.69 per share

- 2017-09: $59.43 per share

- 2017-10: $59.20 per share

- 2017-11: $63.42 per share

- 2017-12: $61.28 per share

- 2018-01: $66.78 per share

- 2018-02: $64.19 per share

- 2018-03: $63.59 per share

- 2018-04: $61.35 per share

- 2018-05: $63.07 per share

- 2018-06: $59.15 per share

- 2018-07: $59.53 per share

- 2018-08: $58.08 per share

- 2018-09: $53.37 per share

- 2018-10: $45.53 per share

- 2018-11: $47.38 per share

- 2018-12: $42.70 per share

- 2019-01: $47.86 per share

- 2019-02: $51.93 per share

- 2019-03: $53.32 per share

- 2019-04: $52.57 per share

- 2019-05: $40.50 per share

- 2019-06: $47.16 per share

- 2019-07: $45.45 per share

- 2019-08: $46.52 per share

- 2019-09: $47.71 per share

- 2019-10: $49.68 per share

- 2019-11: $48.40 per share

- 2019-12: $47.64 per share

- 2020-01: $42.69 per share

- 2020-02: $39.55 per share

- 2020-03: $37.81 per share

- 2020-04: $42.38 per share

- 2020-05: $47.50 per share

- 2020-06: $47.12 per share

- 2020-07: $48.14 per share

- 2020-08: $48.97 per share

- 2020-09: $52.80 per share

- 2020-10: $51.69 per share

- 2020-11: $56.31 per share

- 2020-12: $54.82 per share

- 2021-01: $54.30 per share

- 2021-02: $59.37 per share

- 2021-03: $67.61 per share

- 2021-04: $67.75 per share

- 2021-05: $71.07 per share

- 2021-06: $72.06 per share

- 2021-07: $70.33 per share

- 2021-08: $72.72 per share

- 2021-09: $61.07 per share

- 2021-10: $73.07 per share

- 2021-11: $79.05 per share

- 2021-12: $85.85 per share

- 2022-01: $76.42 per share

- 2022-02: $68.58 per share

- 2022-03: $63.89 per share

- 2022-04: $58.43 per share

- 2022-05: $60.12 per share

- 2022-06: $54.68 per share

- 2022-07: $63.27 per share

- 2022-08: $56.45 per share

- 2022-09: $48.58 per share

- 2022-10: $54.78 per share

- 2022-11: $60.74 per share

- 2022-12: $57.24 per share

- 2023-01: $67.70 per share

- 2023-02: $65.63 per share

- 2023-03: $69.15 per share

- 2023-04: $68.29 per share

- 2023-05: $63.94 per share

- 2023-06: $72.78 per share

- 2023-07: $72.63 per share

- 2023-08: $72.50 per share

- 2023-09: $66.13 per share

- 2023-10: $69.76 per share

- 2023-11: $75.36 per share

- 2023-12: $82.44 per share

- 2024-01: $77.61 per share

- 2024-02: $82.90 per share

- 2024-03: $89.46 per share

- 2024-04: $82.84 per share

- 2024-05: $83.64 per share

- 2024-06: $81.78 per share

- 2024-07: $85.04 per share

- 2024-08: $83.72 per share

- 2024-09: $89.83 per share

- 2024-10: $75.10 per share

- 2024-11: $74.49 per share

- 2024-12: $68.21 per share

- 2025-01: $67.30 per share

- 2025-02: $66.48 per share

- 2025-03: $65.36 per share

- 2025-04: $67.86 per share

- 2025-05: $64.31 per share

- 2025-06: $65.57 per share

- 2025-07: $70.79 per share

- 2025-08: $71.29 per share

- 2025-09: $73.41 per share

- 2025-10: $65.99 per share

- 2025-11: $65.98 per share

- 2025-12: $66.88 per share

- 2026-01: $73.49 per share

- 2026-02: $78.00 per share

- 2026-03: $65.94 per share

- 2026-04: $61.84 per share

- 2026-05: $56.72 per share

- 2026-06: $62.72 per share

- 2026-07: $60.13 per share

- 2026-08: $59.13 per share

- 2026-09: $56.37 per share

- 2026-10: $59.47 per share

## Annual estimated value (USD per share)

- FY2016: low $18.61 per share, central $20.63 per share, high $23.31 per share

- FY2017: low $23.97 per share, central $28.01 per share, high $31.91 per share

- FY2018: low $27.58 per share, central $33.01 per share, high $37.93 per share

- FY2019: low $34.64 per share, central $49.17 per share, high $57.28 per share

- FY2020: low $29.70 per share, central $33.31 per share, high $38.11 per share

- FY2021: low $43.50 per share, central $60.65 per share, high $70.63 per share

- FY2022: low $46.57 per share, central $65.42 per share, high $76.38 per share

- FY2023: low $49.42 per share, central $71.22 per share, high $83.38 per share

- FY2024: low $51.15 per share, central $74.00 per share, high $86.74 per share

- FY2025: low $53.69 per share, central $75.97 per share, high $89.06 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:42:08.521Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/91142/000009114226000008/aos-20251231.htm); period 2025-12-31, filed 2026-02-10.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.