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:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Smith A O Corp. To summarize, we found that Smith A O Corp ranked in the 53th percentile in terms of potential gain offered. Moreover, under all the scenarios we modelled, the output consistently forecasted positive returns. In terms of the factors that were most noteworthy in this DCF analysis for AOS, they are:
The company's debt burden, as measured by earnings divided by interest payments, is 39.23 -- which is good for besting 92.88% of its peer stocks (US stocks in the Industrials sector with positive cash flow).
The business' balance sheet suggests that 5% of the company's capital is sourced from debt; this is greater than merely 13.96% 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 49.79% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Industrials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as AOS, try LSTR, HUBB, TT, ICFI, and GNK.