A. O. Smith Corporation (AOS) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: A. O. Smith Corporation

Updated on October 31, 2026 · accounts published on October 29, 2026

A highly profitable, nearly debt-free business whose sales have stopped growing

A. O. Smith trades at a P/E of 17.6× over the last 12 months, 20 % below its ten-year median of 22.1× and 32 % below its sector median.

• Is A. O. Smith expensive or cheap? At 17.6× earnings, A. O. Smith trades 32 % below its sector median P/E and has been cheaper only 13 % of the last decade.
• How is the business doing? Revenue was flat over the last 12 months (+0.3 %), yet EPS grew 6 % and ROIC of 18.2 % is twice the sector median.
• How strong is the balance sheet? Net debt is just $0.09 per share in fiscal 2025, and the dividend has risen for 11 straight years on a 36 % payout.
• What to expect from the next earnings? Next results arrive on February 4, 2027, with analysts expecting EPS of $0.93; the 2026 EPS consensus slipped 0.6 % in 30 days.
• Does it turn margin into cash, and at what multiple of the cycle does it trade? Free cash flow matched 100 % of net income in fiscal 2025, and EV/EBITDA of 11.9× sits below its 16.7× seven-year average.

Is A. O. Smith expensive or cheap?

Over the last 12 months A. O. Smith trades at a P/E of 17.6×, against a ten-year median of 22.1× and a sector median of 25.9× across 298 companies. It has traded lower only 13 % of the time in the last decade, not far from the decade low of 15.0×. EV/EBITDA points the same way: 11.9× over the last 12 months against a seven-year average of 16.7×. The stock is down 4 % in 12 months and sits 21 % below its 52-week high of $80.47. The free cash flow yield of 6.7 % over the last 12 months is the cash return the current price implies.

How is the business doing?

Growth has stalled: revenue rose just 0.3 % over the last 12 months, after revenue per share compounded 8.8 % a year in fiscal 2020-2025. Profitability has held up better. The operating margin of 17.6 % over the last 12 months is above the 2014-2025 average of 16.9 %, but below the 19.0 % of fiscal 2025, a slip worth watching. EPS still grew 6.3 %, so flat sales have not dented earnings yet. ROIC of 18.2 % over the last 12 months is twice the sector median of 9.1 %, and it has stayed above 10 % in each of the last 10 fiscal years.

How strong is the balance sheet?

A. O. Smith carries almost no net debt: $1.47 of debt per share against $1.38 of cash in fiscal 2025, equal to 0.1 % of the share price and 0.0× EBITDA, far under the 3× that industrials treat as healthy. Debt to equity is 0.39 and the current ratio 1.64 over the last 12 months. An Altman Z of 8.3 sits well inside the safe zone above 2.99, and the Piotroski score is 8 of 9. The 2.3 % dividend yield looks comfortably covered: the payout was 36 % of earnings in fiscal 2025, the eleventh consecutive year of increases.

What to expect from the next earnings?

In the quarter reported on October 29, 2026, A. O. Smith earned $0.93 per share against $0.90 expected, a 3.9 % beat, and it has topped EPS estimates in 6 of the last 8 quarters. For the next quarter analysts expect $0.93 again. Estimates are drifting slightly lower: the 2026 EPS consensus fell from $3.73 to $3.71 over the last 30 days among 8 analysts, while the revenue consensus barely moved. Sentiment is lukewarm, with 18 of 30 analysts at hold, 10 at buy and 2 at sell. With revenue flat, the operating margin is the figure to watch.

Does it turn margin into cash, and at what multiple of the cycle does it trade?

Industrials are semi-cyclical, so one year of earnings can flatter or punish them. That is why the sector is judged on operating margin and free cash flow conversion rather than on a single P/E. A. O. Smith passes most tests: an operating margin of 19.0 % in fiscal 2025 against a healthy floor of 12 %, and free cash flow equal to 100 % of net income, above the 85 % threshold. The one miss is capex at 1.8 % of revenue in fiscal 2025, below the 4 % to 8 % range: more cash for shareholders, but little reinvestment. On cycle-adjusted EV/EBITDA it trades at 11.9×, under its seven-year average of 16.7×.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.