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 42 industry peers in the Building Products industry. AOS gets an excellent profitability rating and is at the same time showing great financial health properties. 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. With these ratings, AOS could be worth investigating further for dividend investing!.
1. Profitability
1.1 Basic Checks
AOS had positive earnings in the past year.
In the past year AOS had a positive cash flow from operations.
Each year in the past 5 years AOS has been profitable.
AOS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
AOS has a Return On Assets of 15.99%. This is amongst the best in the industry. AOS outperforms 88.10% of its industry peers.
AOS's Return On Equity of 28.17% is amongst the best of the industry. AOS outperforms 80.95% 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 95.24% 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 12.98%.
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's Profit Margin of 13.74% is fine compared to the rest of the industry. AOS outperforms 76.19% of its industry peers.
In the last couple of years the Profit Margin of AOS has grown nicely.
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.
AOS's Operating Margin has improved in the last couple of years.
With a decent Gross Margin value of 38.04%, AOS is doing good in the industry, outperforming 66.67% 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), AOS 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
An Altman-Z score of 7.87 indicates that AOS is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 7.87, AOS belongs to the best of the industry, outperforming 85.71% of the companies in the same industry.
AOS has a debt to FCF ratio of 0.66. This is a very positive value and a sign of high solvency as it would only need 0.66 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 0.66, AOS belongs to the best of the industry, outperforming 85.71% of the companies in the same industry.
AOS has a Debt/Equity ratio of 0.14. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of AOS (0.14) is better than 76.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.14 | ||
| Debt/FCF | 0.66 | ||
| Altman-Z | 7.87 |
ROIC/WACC2.32
WACC9.81%
2.3 Liquidity
A Current Ratio of 1.61 indicates that AOS should not have too much problems paying its short term obligations.
The Current ratio of AOS (1.61) is worse than 66.67% of its industry peers.
AOS has a Quick Ratio of 1.01. This is a normal value and indicates that AOS is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of AOS (1.01) is worse than 71.43% of its industry peers.
The current and quick ratio evaluation for AOS is rather negative, while it does have 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.
The Revenue has been growing slightly by 4.99% on average over the past years.
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
The Earnings Per Share is expected to grow by 8.53% on average over the next years. This is quite good.
Based on estimates for the next years, AOS will show a small growth in Revenue. The Revenue will grow by 5.15% on average per year.
EPS Next Y2.21%
EPS Next 2Y6.39%
EPS Next 3Y6.62%
EPS Next 5Y8.53%
Revenue Next Year0.13%
Revenue Next 2Y2.21%
Revenue Next 3Y2.79%
Revenue Next 5Y5.15%
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 18.92, which indicates a rather expensive current valuation of AOS.
AOS's Price/Earnings ratio is in line with the industry average.
AOS's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.60.
A Price/Forward Earnings ratio of 16.49 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.
When comparing the Price/Forward Earnings ratio of AOS to the average of the S&P500 Index (22.43), we can say AOS is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.92 | ||
| Fwd PE | 16.49 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as AOS.
AOS's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.33 | ||
| EV/EBITDA | 12.49 |
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)8.54
PEG (5Y)1.75
EPS Next 2Y6.39%
EPS Next 3Y6.62%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.96%, AOS has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.16, AOS pays a better dividend. On top of this AOS pays more dividend than 97.62% of the companies listed in the same industry.
AOS's Dividend Yield is comparable with the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.96% |
5.2 History
The dividend of AOS is nicely growing with an annual growth rate of 7.65%!
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 2Y6.39%
EPS Next 3Y6.62%
69.62
-0.89 (-1.26%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners97.78%
Inst Owner Change0.98%
Ins Owners0.62%
Ins Owner Change2.82%
Market Cap9.89B
Analysts71.58
Price Target76.6 (10.03%)
Short Float %5.07%
Short Ratio3.87
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.96% |
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)-0.84%
PT rev (3m)-6.23%
EPS NQ rev (1m)-0.87%
EPS NQ rev (3m)-0.87%
EPS NY rev (1m)0.91%
EPS NY rev (3m)0.23%
Revenue NQ rev (1m)0.95%
Revenue NQ rev (3m)0.55%
Revenue NY rev (1m)0.7%
Revenue NY rev (3m)0%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.92 | ||
| Fwd PE | 16.49 | ||
| P/S | 2.6 | ||
| P/FCF | 24.33 | ||
| P/OCF | 19.25 | ||
| P/B | 5.33 | ||
| P/tB | 12.78 | ||
| EV/EBITDA | 12.49 |
EPS(TTM)3.68
EY5.29%
EPS(NY)4.22
Fwd EY6.06%
FCF(TTM)2.86
FCFY4.11%
OCF(TTM)3.62
OCFY5.19%
SpS26.76
BVpS13.05
TBVpS5.45
PEG (NY)8.54
PEG (5Y)1.75
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 | 7.87 |
F-Score3
WACC9.81%
ROIC/WACC2.32
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 2Y6.39%
EPS Next 3Y6.62%
EPS Next 5Y8.53%
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 5Y5.15%
EBIT growth 1Y-6.71%
EBIT growth 3Y4.81%
EBIT growth 5Y8.47%
EBIT Next Year8.16%
EBIT Next 3Y6.99%
EBIT Next 5Y6.86%
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%