SMITH (A.O.) CORP (AOS) Stock Fundamental Analysis
NYSE:AOS - New York Stock Exchange, Inc. - US8318652091 - Common Stock - Currency: USD
AOS gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 42 industry peers in the Building Products industry. AOS has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. AOS has a valuation in line with the averages, but on the other hand it scores bad on growth. AOS also has an excellent dividend rating. This makes AOS very considerable 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.
In the past 5 years AOS has always been profitable.
Each year in the past 5 years AOS had a positive operating cash flow.
1.2 Ratios
AOS has a Return On Assets of 15.99%. This is amongst the best in the industry. AOS outperforms 90.48% of its industry peers.
The Return On Equity of AOS (28.17%) is better than 83.33% of its industry peers.
With an excellent Return On Invested Capital value of 22.80%, AOS belongs to the best of the industry, outperforming 95.24% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years 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
AOS has a Profit Margin of 13.74%. This is in the better half of the industry: AOS outperforms 76.19% of its industry peers.
AOS's Profit Margin has improved in the last couple of years.
AOS has a Operating Margin of 18.82%. This is in the better half of the industry: AOS outperforms 76.19% of its industry peers.
In the last couple of years the Operating Margin of AOS has grown nicely.
With a decent Gross Margin value of 38.04%, AOS is doing good in the industry, outperforming 69.05% of the companies in the same industry.
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.
AOS has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, AOS has a worse debt to assets ratio.
2.2 Solvency
AOS has an Altman-Z score of 7.84. This indicates that AOS is financially healthy and has little risk of bankruptcy at the moment.
AOS has a Altman-Z score of 7.84. This is amongst the best in the industry. AOS outperforms 88.10% 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 Debt to FCF ratio of 0.66. This is amongst the best in the industry. AOS outperforms 90.48% 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.
AOS has a Debt to Equity ratio of 0.14. This is in the better half of the industry: AOS outperforms 76.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.14 | ||
| Debt/FCF | 0.66 | ||
| Altman-Z | 7.84 |
ROIC/WACC2.26
WACC10.09%
2.3 Liquidity
AOS has a Current Ratio of 1.61. This is a normal value and indicates that AOS is financially healthy and should not expect problems in meeting its short term obligations.
AOS has a worse Current ratio (1.61) than 69.05% of its industry peers.
A Quick Ratio of 1.01 indicates that AOS should not have too much problems paying its short term obligations.
AOS's Quick ratio of 1.01 is on the low side compared to the rest of the industry. AOS is outperformed by 73.81% 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%.
Measured over the past years, AOS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.84% on average per year.
AOS shows a decrease in Revenue. In the last year, the revenue decreased by -1.60%.
Measured over the past years, AOS shows a small growth in Revenue. The Revenue has been growing by 4.99% on average per year.
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.
The Revenue is expected to grow by 4.65% on average over the next years.
EPS Next Y2.3%
EPS Next 2Y6.26%
EPS Next 3Y6.76%
EPS Next 5Y7.97%
Revenue Next Year-0.03%
Revenue Next 2Y2.14%
Revenue Next 3Y2.88%
Revenue Next 5Y4.65%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 18.77, AOS is valued on the expensive side.
Based on the Price/Earnings ratio, AOS is valued a bit cheaper than the industry average as 64.29% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.30, AOS is valued a bit cheaper.
The Price/Forward Earnings ratio is 16.40, which indicates a correct valuation of AOS.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AOS is on the same level as its industry peers.
AOS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.77 | ||
| Fwd PE | 16.4 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AOS is on the same level as its industry peers.
The rest of the industry has a similar Price/Free Cash Flow ratio as AOS.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.14 | ||
| EV/EBITDA | 12.39 |
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.
The excellent profitability rating of AOS may justify a higher PE ratio.
PEG (NY)8.16
PEG (5Y)1.73
EPS Next 2Y6.26%
EPS Next 3Y6.76%
5. Dividend
5.1 Amount
AOS has a Yearly Dividend Yield of 1.93%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.12, AOS pays a better dividend. On top of this AOS pays more dividend than 97.62% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.35, AOS has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.93% |
5.2 History
On average, the dividend of AOS grows each year by 7.65%, which is quite nice.
AOS has been paying a dividend for at least 10 years, so it has a reliable track record.
AOS has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)7.65%
Div Incr Years26
Div Non Decr Years26
5.3 Sustainability
36.80% of the earnings are spent on dividend by AOS. This is a low number and 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 2Y6.26%
EPS Next 3Y6.76%
69.08
-1.39 (-1.97%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners99.56%
Inst Owner Change-0.01%
Ins Owners0.38%
Ins Owner Change2.72%
Market Cap9.82B
Analysts71.58
Price Target76.6 (10.89%)
Short Float %3.44%
Short Ratio2.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.93% |
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)0.4%
EPS NQ rev (3m)-0.47%
EPS NY rev (1m)0.08%
EPS NY rev (3m)0.31%
Revenue NQ rev (1m)0.1%
Revenue NQ rev (3m)1.05%
Revenue NY rev (1m)-0.15%
Revenue NY rev (3m)0.54%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.77 | ||
| Fwd PE | 16.4 | ||
| P/S | 2.58 | ||
| P/FCF | 24.14 | ||
| P/OCF | 19.1 | ||
| P/B | 5.29 | ||
| P/tB | 12.68 | ||
| EV/EBITDA | 12.39 |
EPS(TTM)3.68
EY5.33%
EPS(NY)4.21
Fwd EY6.1%
FCF(TTM)2.86
FCFY4.14%
OCF(TTM)3.62
OCFY5.23%
SpS26.76
BVpS13.05
TBVpS5.45
PEG (NY)8.16
PEG (5Y)1.73
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 | 7.84 |
F-Score3
WACC10.09%
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 Y2.3%
EPS Next 2Y6.26%
EPS Next 3Y6.76%
EPS Next 5Y7.97%
Revenue 1Y (TTM)-1.6%
Revenue growth 3Y2.56%
Revenue growth 5Y4.99%
Sales Q2Q%-1.52%
Revenue Next Year-0.03%
Revenue Next 2Y2.14%
Revenue Next 3Y2.88%
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%