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A. O. Smith Corporation

AOS
60
Industrial - Machinery · Industrials
Also trades as: 0L7A.L GBP 0.62 (+4.17%)
Price
$62.52
+2.87 (+4.81%)
Market Cap
$8.50B
Winston Score
60
Winston is curious
A decent business — some strong pillars, some weaker.
Data as of Oct 22, 2026 · filings through Jun 30, 2026

§How the score breaks down

Quality
Good
19/30
Growth
Weak
3/20
Cash Flow
Exceptional
9/10
Stability
Exceptional
9/10
Valuation
Strong
7/10
Ownership
Good
10/15
Dividends
Good
3/5

60 of 100 counted points = Winston Score 60.

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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)

§Winston Score History

The full picture

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.

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

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Growth Profile

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

Revenue Growth

-0.7% YoY

YoY Growth Rate

Revenue declining

EPS Growth

-15.9% 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

20.4%ownership

→ Flat

Insider ownership roughly steady over the past year

Cash Position

Cash flow positive

$181M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

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.

Each metric is explained in plain language so you know exactly what you're looking at. Start your free trial now.

Quality

Profit per sale
Gross Margin
38.6%
Modest — 38.6% gross margin
Profit after running costs
Operating Margin
16.7%
Healthy — 16.7% operating margin
Return on the money invested
ROCE
23.8%
Exceptional — 23.8% return on capital

ROIC between 15% and 25%. Every dollar invested in the business earns 15 to 25 cents back per year.

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Growth

Sales growth
Sales YoY
+0.4%
Nearly flat sales (+0.4% YoY)
Profit growth
EPS YoY
-0.3%
Earnings shrinking (-0.3% YoY)

Slight earnings drop. Typical near a cyclical low.

How steady the profit is
EPS Consistency
2/8 quarters
Earnings rarely grow — volatile business

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Cash Flow

Profit that turns into cash
Cash Conversion
138%
Turns 138% of profit into real cash
Spare cash per sale
FCF Margin
16.8%
Converts sales into free cash efficiently (16.8%)

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

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Stability

What it owes vs what it owns
Debt / Equity
0.32
Conservative — low debt load (0.32)
Covers its interest
Interest Cover
31.54x
Comfortably covers interest (31.5x)

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

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Valuation

Price vs profit
P/E Ratio (TTM)
17.4x
Fair value — P/E 17.4

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

Cheaper or dearer next year
P/E vs Forward
+4.2
GROWING
Earnings expected to grow meaningfully — cheaper on forward P/E (17.4 → 13.2)

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Dividends

Dividend
Dividend Yield
2.49%
Moderate income — 2.49% yield

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

Dividend record
Dividend Growth
+5.9%
Dividend growing modestly (5.9% YoY)
Payout Ratio
40%
no trend
Pays out a modest share of profit and keeps the rest to reinvest. Room to keep paying through a weak year.

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