A. O. Smith Corporation manufactures and markets a range of water heaters, boilers, and other products for residential and commercial end markets in the United States, China, Canada, Europe, and India. The company is based in Milwaukee, Wisconsin.
AOS Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Smith A O Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Smith A O Corp ranked in the 44th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. In terms of the factors that were most noteworthy in this DCF analysis for AOS, they are:
Interest coverage, a measure of earnings relative to interest payments, is 38.18 -- which is good for besting 92.2% of its peer stocks (US stocks in the Industrials sector with positive cash flow).
The business' balance sheet suggests that 4% of the company's capital is sourced from debt; this is greater than just 12.26% of the free cash flow producing stocks we're observing.
AOS's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 46.25% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
HI, ROLL, CHRW, LMT, and PH can be thought of as valuation peers to AOS, in the sense that they are in the Industrials sector and have a similar price forecast based on DCF valuation.
In the 60 or so days since I wrote my cautious piece about A.O. Smith (AOS), the shares are up about 2% against a gain of just over 8% for the S&P 500. This relative underperformance, coupled with the fact that the company has since released financial results, opens the...
Patrick Doyle on Seeking Alpha | September 8, 2020
Shares of A.O. Smith (NYSE:AOS) were unchanged after the company reported Q2 results.Quarterly Results Earnings per share were down 26.23% year over year to $0.45, which beat the estimate of $0.42.Revenue of $663,900,000 declined by 13.26% year over year, which beat the estimate of $661,220,000.Outlook The upcoming fiscal year's EPS expected to be between $1.72 and $1.86.Conference Call Details Date: Jul 30, 2020Time: 10:00 AMView more earnings on AOSET Webcast URL: https://edge.media-server.com/mmc/p/trh8rrwuRecent Stock Performance 52-week high: $53.7252-week low: $33.80Price action over last quarter: Up 22.11%Company Description A.O. Smith Corporation manufactures and markets comprehensive lines of residential and commercial gas, gas tankless, and electric water heaters. Suppleme...