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AOS, A.O. Smith Corporation

Smith and State brands, includes approximately 800 independent wholesale plumbing distributors serving residential and commercial end markets.

Boilers are closed loop water heating systems used primarily for space heating or hydronic heating.

Our water treatment products range from point-of-entry water softeners, solutions for problem well water, whole-home water filtration products and point-of-use carbon and reverse osmosis products.

Latest annual: FY2025 10-K

AOS · A.O. Smith Corporation

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$3.8B

+0.3% YoY · 6% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $3.8B 5-yr avg $3.8B

Gross margin 39% 5-yr avg 38%

Operating margin 18.5% 5-yr avg 17.2%

ROIC 23% 5-yr avg 32%

Owner-earnings margin 17% 5-yr avg 13%

Free cash flow margin 17% 5-yr avg 13%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is North America (77%) and Rest of World (23%).
What moves the needle: Gross margin has run about 39% and operating margin about 19% through the cycle, a solid spread between what it charges and what the product costs to make. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run high across the record (median 29%, above 15% in 9 of 9 years). Owner earnings agree: roughly 13% of revenue reaches owners as cash, consistently. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

North America is 77% of revenue, with Rest of World the other meaningful segment at 23%.

Revenue by reportable segment, FY2025

North America77%$3.0B
Rest of World23%$866M

By geographyUnited States68%China18%Canada9%Other Foreign6%

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$2.7B	$3.0B	$3.2B	$3.0B	$2.9B	$3.5B	$3.8B	$3.9B	$3.8B	$3.8B	$3.8B	RevenueRevenue
41%	41%	41%	39%	38%	37%	35%	39%	38%	39%	39%	Gross marginGross mgn
25%	24%	24%	24%	23%	20%	18%	19%	19%	20%	20%	SG&A / revenueSG&A/rev
3%	3%	3%	3%	3%	3%	2%	3%	3%	2%	2%	R&D / revenueR&D/rev
$515M	$578M	$613M	$529M	$503M	$682M	$362M	$746M	$708M	$729M	$706M	Operating incomeOp. inc.
19.2%	19.3%	19.2%	17.7%	17.4%	19.3%	9.6%	19.3%	18.5%	19.0%	18.5%	Operating marginOp. mgn
$327M	$297M	$444M	$370M	$345M	$487M	$236M	$557M	$534M	$546M	$528M	Net incomeNet inc.
29%	43%	20%	22%	22%	22%	-5%	24%	24%	24%	23%	Effective tax rateTax rate
											Cash flow & returns
$447M	$326M	$449M	$456M	$562M	$641M	$391M	$670M	$582M	$617M	$708M	Operating cash flowOp. cash
$65M	$70M	$72M	$78M	$80M	$78M	$77M	$78M	$79M	$85M	$88M	DepreciationDeprec.
$55M	($40M)	($67M)	$8M	$137M	$76M	$79M	$35M	($31M)	($15M)	$92M	Working capital & otherWC & other
$81M	$94M	$85M	$64M	$57M	$75M	$70M	$73M	$108M	$71M	$60M	CapexCapex
3.0%	3.1%	2.7%	2.2%	2.0%	2.1%	1.9%	1.9%	2.8%	1.8%	1.6%	Capex / revenueCapex/rev
$366M	$256M	$364M	$392M	$505M	$566M	$321M	$598M	$503M	$546M	$648M	Owner earningsOwner earn.
13.6%	8.6%	11.4%	13.1%	17.5%	16.0%	8.6%	15.5%	13.2%	14.3%	17.0%	Owner earnings marginOE mgn
$366M	$232M	$364M	$392M	$505M	$566M	$321M	$598M	$474M	$546M	$648M	Free cash flowFCF
13.6%	7.7%	11.4%	13.1%	17.5%	16.0%	8.6%	15.5%	12.4%	14.3%	17.0%	Free cash flow marginFCF mgn
$91M	$43M	$0	$107M	$0	$208M	$8M	$17M	$146M	$0	$470M	AcquisitionsAcquis.
$84M	$97M	$130M	$149M	$159M	$170M	$177M	$184M	$190M	$196M	$197M	Dividends paidDiv. paid
$135M	$139M	$203M	$288M	$57M	$367M	$404M	$307M	$306M	$401M	—	BuybacksBuybacks
24%	19%	29%	26%	28%	33%	—	35%	29%	30%	23%	ROICROIC
22%	18%	26%	22%	19%	27%	13%	30%	28%	29%	28%	Return on equityROE
16%	12%	18%	13%	10%	17%	3%	20%	18%	19%	18%	Retained to equityRetained/eq
											Balance sheet
$755M	$820M	$645M	$551M	$690M	$631M	$482M	$363M	$276M	$193M	$204M	Cash & investmentsCash+inv
$519M	$593M	$647M	$590M	$585M	$634M	$581M	$596M	$541M	$582M	$634M	ReceivablesReceiv.
$251M	$297M	$305M	$303M	$300M	$448M	$516M	$497M	$532M	$479M	$489M	InventoryInvent.
$529M	$535M	$544M	$510M	$595M	$746M	$626M	$600M	$589M	$504M	$543M	Accounts payablePayables
$241M	$355M	$408M	$383M	$290M	$336M	$472M	$493M	$485M	$558M	$580M	Operating working capitalOper. WC
$1.6B	$1.8B	$1.6B	$1.5B	$1.6B	$1.8B	$1.6B	$1.5B	$1.4B	$1.3B	$1.4B	Current assetsCur. assets
$766M	$794M	$785M	$767M	$886M	$1.1B	$934M	$945M	$897M	$863M	$878M	Current liabilitiesCur. liab.
2.0×	2.2×	2.1×	2.0×	1.8×	1.6×	1.7×	1.6×	1.6×	1.5×	1.6×	Current ratioCurr. ratio
$492M	$517M	$513M	$546M	$547M	$628M	$620M	$633M	$762M	$711M	$920M	GoodwillGoodwill
$2.9B	$3.2B	$3.1B	$3.1B	$3.2B	$3.5B	$3.3B	$3.2B	$3.2B	$3.1B	$3.7B	Total assetsAssets
$324M	$410M	$221M	$284M	$113M	$197M	$345M	$127M	$193M	$155M	$616M	Total debtDebt
($431M)	($410M)	($424M)	($267M)	($576M)	($435M)	($137M)	($236M)	($83M)	($38M)	$412M	Net debt / (cash)Net debt
70.5×	57.2×	73.0×	48.1×	68.9×	158.6×	38.5×	62.1×	105.6×	54.0×	39.9×	Interest coverageInt. cov.
$1.5B	$1.6B	$1.7B	$1.7B	$1.8B	$1.8B	$1.7B	$1.8B	$1.9B	$1.9B	$1.9B	Shareholders’ equityEquity
											Per share
177M	175M	172M	167M	163M	161M	156M	151M	147M	142M	139M	Shares out (diluted)Shares
$15.19	$17.16	$18.51	$17.95	$17.81	$21.94	$24.10	$25.51	$25.96	$26.99	$27.39	Revenue / shareRev/sh
$1.85	$1.70	$2.58	$2.22	$2.12	$3.02	$1.51	$3.69	$3.63	$3.85	$3.79	EPS (diluted)EPS
$2.07	$1.47	$2.11	$2.35	$3.11	$3.51	$2.06	$3.96	$3.42	$3.85	$4.65	Owner earnings / shareOE/sh
$2.07	$1.33	$2.11	$2.35	$3.11	$3.51	$2.06	$3.96	$3.22	$3.85	$4.65	Free cash flow / shareFCF/sh
$0.48	$0.55	$0.76	$0.89	$0.98	$1.05	$1.14	$1.22	$1.29	$1.38	$1.41	Dividends / shareDiv/sh
$0.46	$0.54	$0.49	$0.39	$0.35	$0.47	$0.45	$0.48	$0.73	$0.50	$0.43	Cap. spending / shareCapex/sh
$8.55	$9.42	$9.97	$10.00	$11.37	$11.36	$11.22	$12.21	$12.81	$13.09	$13.49	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+6.6%/yr	+8.7%/yr
Owner earnings / share	+7.1%/yr	+4.4%/yr
EPS	+8.5%/yr	+12.7%/yr
Dividends / share	+12.5%/yr	+7.2%/yr
Capital spending / share	+1.0%/yr	+7.4%/yr
Book value / share	+4.9%/yr	+2.9%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

142Mpeak FY2016

ROIC

30%low FY2017

Gross margin

39%low FY2022

Net debt ÷ owner earnings

-0.1×peak FY2025

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$546Mowner earningsvs.$546Mnet incomelow FY2017

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business reported $546M of profit but $546M of owner earnings: $200K less than the profit line, taken out by capital spending and the timing of cash.

Reported net income$546M

Owner earnings$546M · 14% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$546M	$534M	$557M	$236M	$487M
Depreciation & amortizationnon-cash charge added back	+$85M	+$79M	+$78M	+$77M	+$78M
Working capital & othertiming of cash in and out, other non-cash items	−$15M	−$31M	+$35M	+$79M	+$76M
Cash from operations	$617M	$582M	$670M	$391M	$641M
Maintenance capital expenditurethe spending needed just to hold position and volume	−$71M	−$79M	−$73M	−$70M	−$75M
Owner earnings	$546M	$503M	$598M	$321M	$566M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	—	−$29M	—	—	—
Free cash flow	$546M	$474M	$598M	$321M	$566M
Owner-earnings marginowner earnings ÷ revenue	14%	13%	16%	9%	16%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position .

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 54.0×

Comfortable

Operating income $729M ÷ interest expense $14M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? +$38M

Net cash

Cash $175M + ST investments $19M − debt $155M

What this means
Cash and short-term investments exceed every dollar of debt by $38M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 52d

Tight

DSO 55 + DIO 75 − DPO 79 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 29%

Very high (≥25%) through the cycle

9-yr median, range 19%–35%; 30% latest = NOPAT $557M ÷ invested capital $1.8B

Industry peers: median 12%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran 30% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 13%

Solid through the cycle

10-yr median margin, range 9%–17%; latest $546M = operating cash $617M − maintenance capex $71M

Industry peers: median 11%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 14% of revenue this year, a 13% median across 10 years.
Are earnings backed by cash? 1.13×

Cash-backed

Cash from ops $617M ÷ net income $546M

In the filing’s words The filing leans on adjusted, non-GAAP earnings, but the GAAP profit is itself cash-backed — the adjustments are not papering over a cash shortfall here.

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 109%

Returned more than it generated

Dividends + buybacks $597M ÷ Owner Earnings $546M

What this means
The company returned more than it generated: against $546M of Owner Earnings, $597M (109%) went back to shareholders, $196M dividends, $401M buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.
Investing or harvesting? 0.83×

Maintaining

Capex $71M ÷ depreciation $85M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 5 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $3.8B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.50×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Pass

Debt ≤ working capital · $155M vs $429M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (10)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +53%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $3.94/share (latest year $3.95), the averaged base the calculator's gate runs on, and book value is $13.44/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 10 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 19% → 19% (3-yr avg ends)

In the filing’s words The filing attributes gains to higher prices, but the margin in the record has not followed — the claim outruns the result here.

What this means
Through the cycle the operating margin held roughly steady — about 19% early, 19% lately, median 19%.
Reinvestment, incremental ROIC returns capital

What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
Owner earnings growth +6%/yr

What this means
Owner earnings grew about 6% a year over the record.
Worst year 2022 · 9.6% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −2.4%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.
How management talks about it Owner’s terms

What this means
The record and the register agree: capital is compounding and the filing reasons in an owner’s terms — per-share value, return on capital, the long term — not a promoter’s.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing Named as a competitive risk

Its FY2025 10-K names artificial intelligence as a competitive threat.

“There is also increasing use of data analytics, machine learning, and artificial intelligence software, which our competitors may be able to use more effectively or implement more successfully than we are able to do.”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.4B

Cash & short-term investments$204M
Receivables$634M
Inventory$489M
Other current assets$42M

Current liabilities$878M

Debt due within a year$42M
Accounts payable$543M
Other current liabilities$294M

Current ratio1.56×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.00×stricter: inventory excluded

Cash ratio0.23×strictest: cash alone against what's due

Working capital$490Mthe cushion left after near-term bills

Debt due this year vs. cash$42M due · $204M cash covered by cash on hand, no refinancing forced · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago−1.9%the freshest read on whether the business is still growing

Current ratio, recent quarters1.7× → 1.6×

Deeper floors

Tangible book value$359Mequity stripped of goodwill & intangibles

Net current asset value($404M)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$667M$52M of it operating leases

Deferred revenue$29Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$42M

'27$40M

'28$25M

'29$25M

'30$10M

Bars scaled to the largest single year.

Due in the next 12 months$42Mthe first rung: what must be repaid or rolled over within the year

Within two years$82Mthe near wall, the part most exposed to today’s credit conditions

Biggest single year$42Min 2026the lumpiest maturity, where a refinancing, if needed, is largest

Due over the next five years$142Mthe near slice; the balance sheet carries $155M of debt in all

Against what the business has and earns

Cash & short-term investments, Mar 31, 2026$204M

One year of owner earnings (FY2025)$546M

Together, against $42M due next year17.7×

Cash on hand as of Mar 31, 2026 plus a year’s owner earnings comes to $750M against the $42M due in the twelve months after the Dec 31, 2025 schedule: 18 times it.

Maturity schedule extracted from the company’s Dec 31, 2025 annual report and reconciled to the balance-sheet debt.

How the cash was used, 2016–2025

Over the record, the business generated $5.1B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$778M · 15%
Dividends$1.5B · 30%
Buybacks$2.6B · 51%
Retained (debt / cash)$223M · 4%

Returned to owners$4.1B
94% of the owner earnings the business produced over the span, $1.5B as dividends and $2.6B as buybacks.
Average price paid for buybacks$60.74
Across the years where the filing reports a share count, 43M shares were bought for $2.6B, about $60.74 each. Year to year the price paid ranged from $41.31 (2016) to $81.43 (2024); its heaviest year, 2022, paid $60.70 ($404M).
Net change in share count−21.3%
The diluted count fell from 177M to 139M, so the buybacks outran the stock issued to staff.
Dividend record$1.38/sh
Paid in 10 of the years on record, the per-share dividend growing about 13% a year. It was never cut over the span.
Return on what it retained—
Not read here: owner earnings are negative over the span, or the company returned nearly all its earnings rather than retaining them, so there is too little retained to measure a return on.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$1.1B34% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity38%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$619Mover 10 years buying other businesses, against $778M of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Mr. Wheeler	$6.9M	$14.7M	$566M
2022	Mr. Wheeler	$6.6M	$181k	$321M
2023	Mr. Wheeler	$8.3M	$12.8M	$598M
2024	Mr. Wheeler	$7.7M	$6.4M	$503M
2025	Mr. Shafer	$5.0M	$4.9M	$546M
2025	Mr. Wheeler	$8.5M	$8.3M	$546M

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership1.1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.

Inverting the record

Invert: instead of why A.O. Smith Corporation is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

None of the 6 tests turned up a mark; each came back clean. A clean panel says only that these particular ways of being wrong are not written into the record.

Each test came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

How much of the revenue rides on one buyer?
≈$1.6B · 41% of revenue on the largest customers (TTM)
“A material loss, cancellation, reduction, or delay in purchases by one or more of our largest customers could harm our business Sales to our five largest customers represented approximately 41 percent of our sales in 2025.”verify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Building Products

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
WHRWhirlpool	$15.5B	17%	5.4%	12%	3%
SNSharkNinja Inc.	$6.4B	48%	11.7%	21%	6%
AYIAcuity	$4.3B	42%	12.7%	19%	11%
GNRCGenerac	$4.2B	36%	14.5%	14%	11%
AOSA.O. Smith Corporation	$3.8B	39%	19.1%	29%	13%
ENSEnerSys	$3.8B	31%	12.1%	10%	11%
WWDWoodward	$3.6B	26%	12.5%	11%	10%
HELEHelen of Troy	$1.8B	43%	11.8%	11%	12%
Group median	—	37%	12.3%	13%	11%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what A.O. Smith Corporation has delivered.

Today’s price $

Through the cycle, A.O. Smith Corporation earns about $513M on its 13.4% median owner-earnings margin. This year’s 14.3% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($513M) Net of stock comp

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+4%/yr

Owner-earnings growth · ’16→’25+6%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings $648M on 138M shares outstanding (a weighted basic average, the only count this filer tags); net debt $412M. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh AOS against another business →

The owners of AOS: the meeting and the votes →

Cite: Owner Scorecard, "A.O. Smith Corporation (AOS), the owner's record," https://ownerscorecard.com/c/AOS, data as of 2026-07-09.

Manual order: ← AORT its page in the Manual AOSL →

Industry order: ← ACA the Building Products chapter APOG →