A. O. Smith Corporation AOS
A. O.
Smith remains a hold as the investment case is unchanged: a deeply discounted valuation (PE 16.8 vs peer median 29.1, EV/EBITDA 12.1 vs 19.5) supported by $546M FY2025 free cash flow and a near-pristine balance sheet ($192M debt vs $1.86B equity) is offset by a five-year revenue plateau in the $3.75–3.85B range and a deteriorating China franchise. Q2 2026 results confirmed both sides — North America segment sales grew 5% with 21% boiler growth and adjusted EPS of $1.03 beat the $0.96 consensus, but Rest of World sales fell 19% on continued China consumer weakness. Technicals have weakened further since the prior review: the stock at $59.13 now trades below both its 50-day MA ($61.30) and 200-day MA ($65.31) with a negative MACD histogram (-0.396) and RSI near 40, while smart money flows remain slightly negative (-0.0073 as of Q2 2026). The valuation floor and NA boiler momentum argue against selling, but absent organic top-line growth and no technical confirmation of a bottom keep this a hold.
What could go wrong
- China deterioration accelerates. Rest of World sales fell 19% in Q2 2026 on China consumer appliance weakness; further declines would compress consolidated margins and revenue despite NA strength.
- NA growth is acquisition-aided. Q2 2026 North America segment sales of $820.5M grew 5% partly driven by the Leonard Valve acquisition and carryover pricing, not organic volume — residential water heater volumes were lower year-over-year.
- Technical breakdown. Stock at $59.13 trades below both 50-day ($61.30) and 200-day ($65.31) moving averages with negative MACD histogram (-0.396) and RSI at 39.7, suggesting continued downward momentum.
- Smart money outflows. Smart money score deteriorated from +0.0211 (Q3 2025) to -0.0073 (Q2 2026), and Amundi cut its position by 86.4% in Q1 2026, indicating institutional caution.
What would change my mind
Where this comes from: peer_relative composite · FMP FY2025 annual · FMP annual fundamentals · PRNewsWire Q2 2026 results / Zacks. Orin's read on AOS; not advice.
Twelve months actual closes to 2026-09-24 · actual filings
50-day average 200-day average · volume below
On file
All AOS filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| Fmr | $653.4M | 0.0% of fund |
| Vanguard Capital Management | $457.0M | 0.0% of fund |
| Vanguard Portfolio Management | $442.3M | 0.0% of fund |
| State Street | $412.8M | 0.0% of fund |
| Invesco | $347.2M | 0.0% of fund |
| Geode Capital Management | $233.7M | 0.0% of fund |
71 filers · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 87 Form 4 filings, net −$2.9M. Of the 50 on hand, 0 were open-market purchases and 2 sales— the rest are grants, option exercises and tax withholding.
Ask Orin about AOS
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Start 3 free days →Where it trades
| Metric | Now | Own median | Sector |
|---|---|---|---|
| P/E | 16.1× | 22.2× | 44.5× |
| EV/EBITDA | 11.6× | 14.8× | — |
| P/S | 2.10× | 2.63× | — |
| P/B | 4.3× | 5.3× | — |
Its P/E sits below all 5 of the last 5 years (−1.17σ from its own mean).
3.5%
free-cash-flow growth every year for 10 years, discounted at 10%, is what today’s price implies — starting from $0.5B of trailing free cash flow. It is an assumption the market is making, not a forecast Orin is making.
What Wall Street published
$71
$67 – $75 · +21% against today's price
- 10 buy or overweight
- 18 hold
- 2 underweight or sell
The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.
Against the companies it is compared to
| Company | Market cap | P/E | EV/EBITDA | Gross | Net | ROE |
|---|---|---|---|---|---|---|
| AOSA. O. Smith Corporation | $8B | 16.1× | 11.6× | 38.6% | 13.1% | 27% |
| AITApplied Industrial Technologies, Inc. | $12B | 29.9× | 22.9× | 30.3% | 8.3% | 22% |
| DCIDonaldson Company, Inc. | $10B | 22.1× | 17.9× | 34.6% | 11.7% | 28% |
| FLSFlowserve Corporation | $10B | 26.4× | 15.5× | 35.1% | 8.0% | 17% |
| GNRCGenerac Holdings Inc. | $12B | 44.9× | 23.0× | 39.5% | 5.8% | 10% |
| GTLSChart Industries, Inc. | $10B | — | 26.0× | 31.3% | -0.6% | -1% |
| POOLPool Corporation | $6B | 14.8× | 12.5× | 29.6% | 7.4% | 32% |
| RRXRegal Rexnord Corporation | $10B | 31.0× | 12.0× | 37.8% | 5.3% | 5% |
| SPXCSPX Technologies, Inc. | $9B | 30.6× | 17.0× | 40.2% | 11.3% | 12% |
| WTSWatts Water Technologies, Inc. | $12B | 30.9× | 19.1× | 48.8% | 14.3% | 19% |
The median is of the 8 peers listed above and nothing else — check it against the column. This company trades 46.9% below it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.
What it has traded at
What its sector has traded at
Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.
Discounted cash flow
| Model | Fair value | Against | Computed |
|---|---|---|---|
| Standard DCF | $85 | $57.99 · +46% | 2026-06-10 |
| Levered DCF | $60 | $57.99 · +3% | 2026-06-10 |
The vendor’s intrinsic-value models. Treat them as a low-growth anchor — for a fast grower the market routinely pays well above a DCF. These were computed against the price in the “against” column, not today’s.
Every estimate on one scale
The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.