A. O. Smith Corporation

AOS

Industrial - Machinery · Industrials

Price

$58.85

-1.68 (-2.78%)

Market Cap

$8.22B

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Share count falling — buybacks

−13.3% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 161.3M (2021) → 139.9M (2025)

A. O. Smith makes water heaters and water treatment products for homes and businesses. Its main products include residential and commercial water heaters, boilers, and water purification systems. The company is one of the largest water heater manufacturers in North America and has a strong presence in China, where it sells directly to consumers.

A. O. Smith earns money by selling hardware — water heaters and filtration units — through plumbers, contractors, retailers, and distributors. It operates primarily in the United States, Canada, China, and India, generating roughly $3.5 billion in annual revenue. Its moat comes from brand recognition, a large installer network, and the fact that water heaters are a necessity that must be replaced every 8–12 years. The key risk is its significant exposure to China, where slowing construction activity and weaker consumer spending have pressured sales in recent years.

Winston Score History

Politician Trades

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1 Congressional buy and 2 sells on AOS in the last 12 months.

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Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

-1.9% YoY

YoY Growth Rate

Revenue declining

EPS Growth

-10.5% YoY

YoY Growth Rate

Earnings declining

R&D Spend

$0/ year

↓ Declining (-100% vs prior year)

0.0% of revenue

Below sector average (4%)

R&D spend declining — could signal cost-cutting or efficiency

Insider Activity

1.7%ownership

→ Flat

Insiders holding steady — not selling despite ability to

Cash Position

Cash flow positive

$185M cash & investments

Quarterly Free Cash Flow

→ Burn rate stable

Company generates more cash than it spends — no dilution risk from fundraising

Revenue declining

A. O. Smith Corporation's revenue is actually shrinking. In a growth stock, that removes the core investment thesis. The low Winston Score here may be warranted — unless there's a turnaround story.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin

38.7%

Modest — 38.7% gross margin

Operating Margin

17.1%

Healthy — 17.1% operating margin

ROCE

6.5%

Weak — 6.5% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY

+0.2%

Nearly flat sales (0.2% YoY)

EPS YoY

+4.4%

Modest earnings growth (4.4% YoY)

Single-digit earnings growth — steady but not exciting.

EPS Consistency

4/8 quarters

Earnings inconsistent quarter-to-quarter

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Cash Flow

Cash Conversion

134%

Turns 134% of profit into real cash

FCF Margin

17.0%

Converts sales into free cash efficiently (17.0%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity

0.33

Conservative — low debt load (0.33)

Interest Cover

39.94x

Comfortably covers interest (39.9x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

15.7x

Fair value — P/E 15.7

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

+0.6

GROWING

Earnings roughly flat

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Dividends

Dividend Yield

2.26%

Moderate income — 2.26% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth

+6.0%

Dividend growing modestly (6.0% YoY)

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