| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 71 | 15.9x | 17.8x | Top tier | |
Growth | 30 | 0.4% | 7.1% | Bottom tier | |
Quality | 86 | 22.2% | 4.5% | Top tier | |
Safety | 85 | 0.7x | 2.6x | Top tier | |
Capital Return | 52 | 2.45% | 2.12% | Around median | |
Momentum | 19 | -13.2% | 2.9% | Bottom tier | |
Sentiment | 82 | 10 | 3 | Top tier |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
A. O. Smith Corporation manufactures and markets water heaters, boilers, and water treatment products, with its primary operations in North America and businesses in China, India, and other international markets. Revenue comes from residential and commercial water heaters, residential and commercial boilers, water treatment channels, and Leonard Valve, which expands the company’s capabilities in water management and digital controls. In Q2 FY2026, North America represented approximately 81% of segment sales, with sales of $821 million, compared with $195 million for the Rest of World segment.
In Q2 FY2026, the company reported revenue of $1.0 billion and gross profit of $387.8 million, equivalent to a gross margin of approximately 38.8%. Net income was $124.9 million, or $0.91 per share according to EDGAR data, while adjusted earnings per share were $1.03 according to the earnings call. North America sales increased 5%, or 3% organically excluding Leonard Valve, but the segment’s adjusted margin declined 100 basis points to 24.4% due to higher steel, input, and tariff costs.
The business mix showed a clear divergence in Q2 FY2026: North America boiler sales increased 21% and water heater sales in the region increased 2%, while water treatment sales declined 2%. In contrast, Rest of World segment sales fell 19%, and China sales declined 28% in local currency, reducing segment earnings to $10 million and its margin to 5.2%. On a trailing twelve-month basis in 2026, revenue was $3.8 billion, gross profit was $1.5 billion, and net income was $500.3 million.
Automated analysis for informational purposes only — not investment advice.
The analyst consensus on AOS is neutral, with an average price target of $70.5 and a range of $67 to $75. The average is approximately 13.9% below the 52-week range high of $81.87, and even the highest target remains below that peak, consistent with a reassessment that accounts for the 28% decline in China in local currency, margin pressure, and the lowered upper end of the FY2026 outlook.
Figures in the text are as of 2026-08-30; the live price is shown at the top of the page.
Revenue was $1.0 billion, gross profit was $387.8 million, and net income was $124.9 million. Earnings per share according to EDGAR data were $0.91, while adjusted earnings per share were $1.03 in management’s presentation dated July 30, 2026. North America sales increased 5% to $821 million, while Rest of World segment sales declined 19% to $195 million.
The company lowered the upper end of its expected sales growth from 4% to 3%, resulting in a range of 2% to 3%. It also lowered the upper end of adjusted earnings per share from $4.00 to $3.85, while maintaining the lower end at $3.70. The revision was primarily due to continued weakness in North America residential water heaters because of sluggish new construction and existing home sales, while assumptions for boilers, China, India, and Leonard Valve remained materially unchanged.
Leonard Valve contributed sales of $16 million in Q2 FY2026. A. O. Smith targets approximately $70 million in sales from it in FY2026, with double-digit growth, and is using the transaction to expand its water management platform and digital control capabilities. In contrast, financing the acquisition contributed to net debt reaching $456 million and the total debt-to-capital ratio reaching 25.7% at the end of the quarter.
China sales declined 28% in local currency in Q2 FY2026 due to weak consumer demand, particularly in the premium category. This caused Rest of World segment sales to fall 19% and its earnings to decline to $10 million, with its margin falling to 5.2%. Management expects China sales to decline by a low-double-digit percentage in FY2026 and said on July 30, 2026 that all options related to the strategic review of the business remain under consideration.
The company announced increases of between 4% and 7% for water heater and boiler products, with their impact beginning to materialize around the middle of Q3 FY2026 before the full benefit appears in Q4. However, steel costs increased approximately 20% year over year in Q2, and management expects them to be approximately 15% higher during FY2026 compared with 2025. The company therefore expects an approximately neutral price-cost relationship in the second half, with freight, foams, plastics, and tariffs continuing to pressure margins.
The company generated free cash flow of $233 million in the first half of FY2026, an increase of 67% from 2025, driven by working capital management despite lower earnings. By the end of Q2, it had $181 million in cash and had repurchased approximately 2.6 million shares for $162 million during the first half. It raised its FY2026 share repurchase target from $200 million to $300 million, and the board also approved a quarterly dividend of $0.36 per share.
