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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
A. O. Smith Corporation (XNYS:AOS) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
AOS
Name:
A. O. SMITH CORPORATION (XNYS:AOS)
Sector:
3.60M
Industry:
Specialty Industrial Machinery
CEO:
Mr. Kevin Wheeler
Total Employees:
13,700
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -16.47% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF A. O. SMITH CORPORATION(AOS) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY INDUSTRIAL MACHINERY INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
56.27
One Month Price Target:
$56.65
Six Month Price Target :
$58.52
Likely Price in One Year's Time:
Ticker:
$60.78
Likely Trading Range Today Under (Normal Volatility)
$56.1
Price Upper limit ($) :
$56.49
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$53.94
This week:
$51.06
This month :
$45.85
Other Primary facts
Market Cap:
8.63B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
154.45M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
10.02%
-9.08%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$67.08
$62.10
$45.46
$50.44
Medium risk (<10%) entry points
Buy Call
Sell Call
$60.48
Buy Put:
Sell Put:
$59.42
$52.05
$53.12
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
AOS
Sharpe Ratio:
2.10%
Comparison:
AOS, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 10.69% higher than the industry
& is -7.99% lower than the market/S&P 500 average
Average Returns/Yield of
AOS
Daily returns:
0.05%
Weekly returns:
0.26%
Monthly returns:
1.03%
Yearly returns:
16.25%
Comparison of returns:
Average annual returns/yield (last 3 years) is -23.68% below industry average
Classification:
AOS, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.62
Statistical test of Returns:
AOS has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.04%
Weekly Volatility:
4.57%
Monthly Volatility:
9.13%
Yearly Volatility:
31.63%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.75%
Volatility in last five trading days has been -63.21% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.14%
Weekly VaR:
-9.26%
Monthly VaR:
-18.52%
How Much Can the price of
AOS
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-64.17%
This translates to price declining to:
$47.39
This translates to price declining to:
$20.16
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
AOS is a 30.73% riskier investment compared to the market/S&P 500 & is 12.00% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -25.37% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
AOS
Beta in relation to market/S&P 500--1.19
Expected beta in 1 year's time:
0.724
Expected beta in 3 year's time:
1.024
Unlevered (debt free) Beta:
1.051
Beta in relation to Nasdaq (XNAS):
0.587
Beta in relation to all global stocks::
0.452
Beta Comparison & Analysis
Beta of competitors/peers::
1.062
Beta is 12.27% higher than peers
Average Industry Beta:
1.281
Beta is -6.97% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
17.05%
Sustainable growth rate is 14.54% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.011
Alpha is -74.87% below industry average alpha yield
Alpha is 69% compared to market & is healthy
Analysis of Cost of Capital of
AOS
Equity cost of capital:
0.113
Equity cost of capital is -5.13% below industry mean WACC
Unlevered (without debt) cost of capital:
9.98%
Before-tax cost of debt:
1.50%
After-tax cost of debt:
1.19%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.19%
WACC is -73.20% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$24.26
Revenue growth rate per share of (3Y):
4.8
Annual revenue growth rate is -24.72% below industry average
EPS:
$3.18
Expected Annual growth rate of EPS (3Y):
9.84%
Expected future EPS growth rate is 222.74% higher than the Specialty Industrial Machinery industry
Free cash flow (FCF) per share:
$3.00
Balance sheet equity growth per share: 35.91%
Equity growth rate per share is 232.67% higher than the industry
Debt per share
$2.03
EBITDA per share
$4.79
Valuation Analysis Today of
AOS
P/E Ratio:
17.28
P/E Ratio of Competitors/Peers:
17.83
P/E ratio is -3.08% lower than main peers & is -37.20% lower than the industry
Stock price/value with industry average P/E ratio: $87.49
AOS is -35.69% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $23.88
Present value of the expected future dividends only: $11.50
P/S (Price to Sales ratio):
2.32
Price to sales ratio is -44.11% below the industry mean
P/B (Price to book value ratio):
4.8
Price to free cash flow: 18.77
Price to free cash flow ratio is -29.28% lower than the industry
Net income growth rate (3Y):
13.99%
Net income growth rate is 939.29% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 8.68%
Dividend yeild: 1.95%
Previous Dividend: $0.28
Previous adjusted dividend: $0.28
Previous Dividend: $1.10
Expected next dividend best case: $0.29
Expected next dividend worst case: $0.27
Average dividend payment (long-term): $0.26
Average dividend increase/decrease (growth rate) % per period: 1.60%
Expected next dividend payment date: 15/08/2022
Expected next dividend record date: 28/07/2022
Expected next dividend declaration date: 07/11/2022
Previous dividend payment date: 16/05/2022
Previous dividend record date: 29/04/2022
Previous dividend declaration date: 04/11/2022
Dividend History:
2022-04-28--$0.28
2021-10-28--$0.28
2021-04-29--$0.26
2022-01-28--$0.28
2021-07-29--$0.26
2021-01-28--$0.26
Dividend growth rate is -54.11% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
17.31%
Net debt to equity ratio:
-4.74%
Debt to assets ratio:
9.12%
Net debt to assets ratio:
-2.50%
Debt-to-asset ratio is -83.10% below industry average
Ability to repay debt:
Interest coverage ratio:
154.08
Interest coverage ratio is 689.53% more than industry average
Looking forward:
Debt growth rate:
48.37%
Annual debt growth is -35% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.609
Statistical significance of correlation:
AOS has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.635
Stock price is -4.22% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.635
Correlation of price movement with Nasdaq (^IXIC):
0
Covariance of price movement with the market:
0
Kurtosis
2.174
Returns are more concentrated around the mean (platykurtic), compared to a normal distribution
Skewness of returns:
0.062
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
AOS
Gross Profit Margin Ratio:
146%
Operating Profit Margin Ratio:
17.32%
Operating profit margin is -171.54% lower than the industry
Net Profit Margin Ratio:
146%
Effective Tax Rate:
22.39%
Effective tax rate is 19.82% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
28.15%
Return on equity (ROE) is 737.78% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
14.82%
Return on assets (ROA) is 215.87% higher than the industry
Financial Leverage:
1.1x
Current Ratio:
1.72
Current ratio is -43.14% below industry average
Cash Conversion Cycle (days):
-38.7
Cash conversion cycle is -162.84% below industry average
The remaining useful life of property plant & equipment is: 2.6 years
Stock based compensation to net income ratio:
1.49%
In-depth Efficiency Analysis
Revenue generated per employee:
273.5K
Each employee generates -93% less revenue than industry average revenue per employee
EBITDA generated per employee:
54.0K
Each employee generates -93% less EBITDA than industry average revenue per employee
Profit generated per employee:
37.2K
Each employee generates -91% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
0.3K
Each employee generates -99% less free cash flow than industry average revenue per employee
Assets/Capital per employee
125.1K
Each employee generates -99% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
AOS
GRACO INC (XNYS:GGG)
TREX COMPANY, INC. (XNYS:TREX)
China Eastern Airlines Corporation Limited (XNYS:CEA)
ROBERT HALF INTERNATIONAL INC. (XNYS:RHI)
HOWMET AEROSPACE INC. (XNYS:HWM)
GFL ENVIRONMENTAL INC. (XNYS:GFL)
SNAP-ON INCORPORATED (XNYS:SNA)
BOOZ ALLEN HAMILTON HOLDING CORPORATION (XNYS:BAH)
WATSCO, INC. (XNYS:WSO)
Current Analyst Ratings
Strong buy�13%
Buy�8%
Hold�33%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
3.75B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.38B
1.36B
-
-
714.70M
-
-
714.70M
-
4.80M
78.70M
739.60M
649.20M
509.20M
656.10M
146.90M
509.20M
Statement of Cash Flow
Date:
Period:
20.30M
Differed Income Tax :
-
Stock Based Compensation :
7.60M
Change in Working Capital :
- 131200.00K
Accounts Receivables:
-
Other Working Capital:
- 131200.00K
Other Non-Cash Items:
-
Net Cash Provided by Operating Activities:
16.50M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 16900.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
405.80M
173.60M
579.40M
608.30M
488.70M
45.00M
1.72B
636.70M
628.80M
360.40M
-
-
87.60M
1.71B
-
3.43B
658.70M
6.80M
-
-
336.60M
1.00B
313.20M
310.70M
623.90M
-
1.63B
295.20M
2.90B
- 327600.0K
-
March 31, 2022 at 6:00:00 AM
3.10B
1.81B
3.43B
-
320.00M
- 85800.0K
31.90M
- 12900.00K
2.10M
-
-
- 107900.00K
- 44200.00K
96.00M
- 56100.00K
-
- 37500.00K
405.80M
443.30M
16.50M
- 12900.00K
3.60M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
AOS
2023
2024
2025
2026
2027
$68.64
$74.14
$80.08
$86.50
$93.43