A. O. Smith Corporation (AOS) DCF Valuation
TGM's two-stage DCF values A. O. Smith Corporation (AOS) between $42.06 and $70.58 depending on assumptions, with a base case of $53.88. Growth is taken from the company's own record (blend of 5-year revenue and FCF growth), fading to 2.5% long-run; the discount rate (9.9%) reflects its beta.
What would today's price require?
$57.44 is justified only if free cash flow grows about +5.6% a year (fading to 2.5% long-run) at a 9.9% required return — faster than the company has actually grown.
| Scenario | FCF growth (fading to 2.5%) | Discount | Value / share |
|---|---|---|---|
| Conservative | 1.0%/yr | 10.9% | $42.06 |
| Base case | 4.0%/yr | 9.9% | $53.88 |
| Optimistic | 7.0%/yr | 8.9% | $70.58 |
| Analyst DCF (FMP) | independent reference — different model | $84.79 | |
Current Price
$57.44
Market-Implied Growth
+5.6%/yr
vs +3.3% 5Y actual
Model Scenario Range
$42.06 – $70.58
model output — not a price target
AOS DCF Fair Value Calculator
Edit the assumptions to see how they change the estimated fair value. Opens seeded with TGM's data-driven base case for AOS (growth from its own 5-year record, discount from its beta), so the sandbox starts where the scenarios above leave off. Illustrative model — not investment advice.
Base inputs: FCF $509.9M · 0.14B shares · net cash $19.5M
Estimated Fair Value
$56.54
-1.6% vs $57.44
Sensitivity — fair value by discount rate × terminal growth
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 4.0%/yr FCF growth and 10-year horizon fixed. Green = above today's $57.44; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 7.9% | $70.17 | $73.78 | $78.06 | $83.21 | $89.53 |
| 8.9% | $60.31 | $62.77 | $65.61 | $68.93 | $72.86 |
| 9.9% | $52.82 | $54.56 | $56.54 | $58.80 | $61.42 |
| 10.9% | $46.94 | $48.22 | $49.64 | $51.24 | $53.07 |
| 11.9% | $42.21 | $43.17 | $44.22 | $45.39 | $46.71 |
About A. O. Smith Corporation
A. O. Smith Corporation (AOS) is a global manufacturer and marketer specializing in a comprehensive array of water heating and treatment solutions. Its operations span North America, China, Europe, and India, organized into two primary geographic segments: North America and Rest of World. The company's product portfolio is extensive, featuring residential and commercial water heaters (gas, heat pump, and electric models), boilers, storage tanks, and various water treatment systems. These products cater to a wide range of applications, including homes, apartments, and condominiums, as well as commercial entities such as restaurants, hotels, office buildings, laundries, car washes, small businesses, hospitals, and schools. Specific offerings include diverse water treatment products like point-of-entry water softeners, well water purification systems, whole-home filtration units, portable filtration bottles, point-of-use carbon filters, and reverse osmosis systems, designed for residential, restaurant, hotel, and office use. A. O. Smith also supplies food and beverage filtration products, expansion tanks, commercial solar water heating installations, and heaters for swimming pools and spas, along with associated components. Advanced heating solutions further encompass heat pumps, electric wall-hung units, gas tankless heaters, combi-boilers, and integrated heat pump and solar water heaters. Products are primarily sold under established brands such as A. O. Smith, State, and Lochinvar, in addition to specialized water softener brands. The company leverages various distribution channels, including independent wholesale plumbing distributors, retail outlets like hardware and home center chains, and manufacturer representative firms. Its Aquasana-branded products are sold directly to consumers through e-commerce platforms and other online retailers. Founded in 1874, A. O. Smith Corporation maintains its corporate headquarters in Milwaukee, Wisconsin.
- Sector
- Industrials
- Industry
- Industrial - Machinery
- CEO
- Stephen Shafer