SMITH (A.O.) CORP (AOS) Stock Fundamental Analysis
NYSE:AOS - New York Stock Exchange, Inc. - US8318652091 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to AOS. AOS was compared to 41 industry peers in the Building Products industry. AOS scores excellent points on both the profitability and health parts. This is a solid base for a good stock. AOS is valued correctly, but it does not seem to be growing. AOS also has an excellent dividend rating. These ratings could make AOS a good candidate for dividend investing.
1. Profitability
1.1 Basic Checks
AOS had positive earnings in the past year.
AOS had a positive operating cash flow in the past year.
AOS had positive earnings in each of the past 5 years.
In the past 5 years AOS always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of AOS (15.99%) is better than 90.24% of its industry peers.
AOS has a Return On Equity of 28.17%. This is amongst the best in the industry. AOS outperforms 82.93% of its industry peers.
Looking at the Return On Invested Capital, with a value of 22.80%, AOS belongs to the top of the industry, outperforming 95.12% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for AOS is significantly above the industry average of 12.62%.
The 3 year average ROIC (18.84%) for AOS is below the current ROIC(22.80%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.99% | ||
| ROE | 28.17% | ||
| ROIC | 22.8% |
ROA(3y)13.62%
ROA(5y)13.16%
ROE(3y)24%
ROE(5y)23.45%
ROIC(3y)18.84%
ROIC(5y)18.44%
1.3 Margins
The Profit Margin of AOS (13.74%) is better than 75.61% of its industry peers.
AOS's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 18.82%, AOS is doing good in the industry, outperforming 75.61% of the companies in the same industry.
In the last couple of years the Operating Margin of AOS has grown nicely.
AOS's Gross Margin of 38.04% is fine compared to the rest of the industry. AOS outperforms 68.29% of its industry peers.
AOS's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.82% | ||
| PM (TTM) | 13.74% | ||
| GM | 38.04% |
OM growth 3Y2.19%
OM growth 5Y3.31%
PM growth 3Y0.51%
PM growth 5Y2.48%
GM growth 3Y0.98%
GM growth 5Y-0.68%
2. Health
2.1 Basic Checks
AOS has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for AOS has been reduced compared to 1 year ago.
The number of shares outstanding for AOS has been reduced compared to 5 years ago.
The debt/assets ratio for AOS is higher compared to a year ago.
2.2 Solvency
AOS has an Altman-Z score of 7.76. This indicates that AOS is financially healthy and has little risk of bankruptcy at the moment.
AOS's Altman-Z score of 7.76 is amongst the best of the industry. AOS outperforms 87.80% of its industry peers.
The Debt to FCF ratio of AOS is 0.66, which is an excellent value as it means it would take AOS, only 0.66 years of fcf income to pay off all of its debts.
AOS has a better Debt to FCF ratio (0.66) than 90.24% of its industry peers.
AOS has a Debt/Equity ratio of 0.14. This is a healthy value indicating a solid balance between debt and equity.
With a decent Debt to Equity ratio value of 0.14, AOS is doing good in the industry, outperforming 78.05% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.14 | ||
| Debt/FCF | 0.66 | ||
| Altman-Z | 7.76 |
ROIC/WACC2.26
WACC10.07%
2.3 Liquidity
A Current Ratio of 1.61 indicates that AOS should not have too much problems paying its short term obligations.
With a Current ratio value of 1.61, AOS is not doing good in the industry: 68.29% of the companies in the same industry are doing better.
A Quick Ratio of 1.01 indicates that AOS should not have too much problems paying its short term obligations.
AOS has a Quick ratio of 1.01. This is in the lower half of the industry: AOS underperforms 73.17% of its industry peers.
AOS does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.61 | ||
| Quick Ratio | 1.01 |
3. Growth
3.1 Past
AOS shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -5.15%.
The Earnings Per Share has been growing by 10.84% on average over the past years. This is quite good.
Looking at the last year, AOS shows a decrease in Revenue. The Revenue has decreased by -1.60% in the last year.
AOS shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.99% yearly.
EPS 1Y (TTM)-5.15%
EPS 3Y7.65%
EPS 5Y10.84%
EPS Q2Q%-5%
Revenue 1Y (TTM)-1.6%
Revenue growth 3Y2.56%
Revenue growth 5Y4.99%
Sales Q2Q%-1.52%
3.2 Future
Based on estimates for the next years, AOS will show a small growth in Earnings Per Share. The EPS will grow by 7.97% on average per year.
AOS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.65% yearly.
EPS Next Y2.21%
EPS Next 2Y6.4%
EPS Next 3Y6.69%
EPS Next 5Y7.97%
Revenue Next Year0.13%
Revenue Next 2Y2.21%
Revenue Next 3Y2.79%
Revenue Next 5Y4.65%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 18.46, which indicates a rather expensive current valuation of AOS.
Based on the Price/Earnings ratio, AOS is valued a bit cheaper than the industry average as 63.41% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of AOS to the average of the S&P500 Index (27.45), we can say AOS is valued slightly cheaper.
The Price/Forward Earnings ratio is 16.08, which indicates a correct valuation of AOS.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AOS indicates a somewhat cheap valuation: AOS is cheaper than 63.41% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.90. AOS is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.46 | ||
| Fwd PE | 16.08 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as AOS.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of AOS is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.74 | ||
| EV/EBITDA | 12.19 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates AOS does not grow enough to justify the current Price/Earnings ratio.
AOS has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)8.37
PEG (5Y)1.7
EPS Next 2Y6.4%
EPS Next 3Y6.69%
5. Dividend
5.1 Amount
AOS has a Yearly Dividend Yield of 2.10%.
Compared to an average industry Dividend Yield of 1.19, AOS pays a better dividend. On top of this AOS pays more dividend than 97.56% of the companies listed in the same industry.
AOS's Dividend Yield is comparable with the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
5.2 History
The dividend of AOS is nicely growing with an annual growth rate of 7.65%!
AOS has paid a dividend for at least 10 years, which is a reliable track record.
AOS has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)7.65%
Div Incr Years26
Div Non Decr Years26
5.3 Sustainability
AOS pays out 36.80% of its income as dividend. This is a sustainable payout ratio.
AOS's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP36.8%
EPS Next 2Y6.4%
EPS Next 3Y6.69%
67.92
-0.17 (-0.25%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners99.56%
Inst Owner Change1.26%
Ins Owners0.38%
Ins Owner Change2.72%
Market Cap9.65B
Analysts71.58
Price Target76.6 (12.78%)
Short Float %3.44%
Short Ratio2.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
Yearly Dividend1.3
Dividend Growth(5Y)7.65%
DP36.8%
Div Incr Years26
Div Non Decr Years26
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-1.3%
Min EPS beat(2)-5.88%
Max EPS beat(2)3.28%
EPS beat(4)1
Avg EPS beat(4)-1.47%
Min EPS beat(4)-5.88%
Max EPS beat(4)3.28%
EPS beat(8)5
Avg EPS beat(8)2.21%
EPS beat(12)8
Avg EPS beat(12)3.74%
EPS beat(16)12
Avg EPS beat(16)5.33%
Revenue beat(2)1
Avg Revenue beat(2)-2.63%
Min Revenue beat(2)-5.3%
Max Revenue beat(2)0.03%
Revenue beat(4)2
Avg Revenue beat(4)-1.22%
Min Revenue beat(4)-5.3%
Max Revenue beat(4)1.62%
Revenue beat(8)3
Avg Revenue beat(8)-0.97%
Revenue beat(12)5
Avg Revenue beat(12)-0.4%
Revenue beat(16)9
Avg Revenue beat(16)0.51%
PT rev (1m)0%
PT rev (3m)-0.84%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.87%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)0.22%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.95%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.7%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.46 | ||
| Fwd PE | 16.08 | ||
| P/S | 2.54 | ||
| P/FCF | 23.74 | ||
| P/OCF | 18.78 | ||
| P/B | 5.2 | ||
| P/tB | 12.47 | ||
| EV/EBITDA | 12.19 |
EPS(TTM)3.68
EY5.42%
EPS(NY)4.22
Fwd EY6.22%
FCF(TTM)2.86
FCFY4.21%
OCF(TTM)3.62
OCFY5.32%
SpS26.76
BVpS13.05
TBVpS5.45
PEG (NY)8.37
PEG (5Y)1.7
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.99% | ||
| ROE | 28.17% | ||
| ROCE | 30% | ||
| ROIC | 22.8% | ||
| ROICexc | 24.89% | ||
| ROICexgc | 49.25% | ||
| OM | 18.82% | ||
| PM (TTM) | 13.74% | ||
| GM | 38.04% | ||
| FCFM | 10.69% |
ROA(3y)13.62%
ROA(5y)13.16%
ROE(3y)24%
ROE(5y)23.45%
ROIC(3y)18.84%
ROIC(5y)18.44%
ROICexc(3y)22.14%
ROICexc(5y)23.24%
ROICexgc(3y)45.61%
ROICexgc(5y)50.22%
ROCE(3y)24.79%
ROCE(5y)24.26%
ROICexcg growth 3Y-5.04%
ROICexcg growth 5Y5.48%
ROICexc growth 3Y-1.33%
ROICexc growth 5Y4.8%
OM growth 3Y2.19%
OM growth 5Y3.31%
PM growth 3Y0.51%
PM growth 5Y2.48%
GM growth 3Y0.98%
GM growth 5Y-0.68%
F-Score3
Asset Turnover1.16
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.14 | ||
| Debt/FCF | 0.66 | ||
| Debt/EBITDA | 0.33 | ||
| Cap/Depr | 134.29% | ||
| Cap/Sales | 2.82% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 64.6% | ||
| Profit Quality | 77.8% | ||
| Current Ratio | 1.61 | ||
| Quick Ratio | 1.01 | ||
| Altman-Z | 7.76 |
F-Score3
WACC10.07%
ROIC/WACC2.26
Cap/Depr(3y)107.07%
Cap/Depr(5y)97.72%
Cap/Sales(3y)2.2%
Cap/Sales(5y)2.13%
Profit Quality(3y)110.8%
Profit Quality(5y)119.02%
High Growth Momentum
Growth
EPS 1Y (TTM)-5.15%
EPS 3Y7.65%
EPS 5Y10.84%
EPS Q2Q%-5%
EPS Next Y2.21%
EPS Next 2Y6.4%
EPS Next 3Y6.69%
EPS Next 5Y7.97%
Revenue 1Y (TTM)-1.6%
Revenue growth 3Y2.56%
Revenue growth 5Y4.99%
Sales Q2Q%-1.52%
Revenue Next Year0.13%
Revenue Next 2Y2.21%
Revenue Next 3Y2.79%
Revenue Next 5Y4.65%
EBIT growth 1Y-6.71%
EBIT growth 3Y4.81%
EBIT growth 5Y8.47%
EBIT Next Year7.96%
EBIT Next 3Y6.65%
EBIT Next 5Y6.28%
FCF growth 1Y-4.71%
FCF growth 3Y-5.75%
FCF growth 5Y3.87%
OCF growth 1Y3.86%
OCF growth 3Y-3.18%
OCF growth 5Y4.98%