A. O. Smith Stock Undervalued by 18%, Future Cash Flow Estimated at $663.7 Million
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 16h ago
0mins
Source: Yahoo Finance
- Valuation Assessment: A. O. Smith's current stock price of approximately $70.52 is deemed undervalued by 18% based on a discounted cash flow analysis that estimates its intrinsic value at $86.03, indicating a market underestimation of its future growth potential.
- Cash Flow Forecast: Analysts project A. O. Smith's free cash flow to reach $663.7 million by 2029, providing a positive outlook for future earnings that may attract more investor interest and confidence in the company's financial health.
- P/E Ratio Analysis: With a P/E ratio of 18.51, A. O. Smith trades below the building industry average of 21.56 and peer average of 29.51, highlighting its relative value attractiveness and potentially prompting investors to reassess their investment strategies.
- Market Positioning: Despite a 6.5% return over the past year, A. O. Smith's stock price remains undervalued compared to industry averages, reflecting a cautious market sentiment regarding its growth potential, which could impact future capital inflows.
Analyst Views on AOS
Wall Street analysts forecast AOS stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AOS is 78.38 USD with a low forecast of 72.00 USD and a high forecast of 88.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
8 Analyst Rating
3 Buy
5 Hold
0 Sell
Moderate Buy
Current: 70.400
Low
72.00
Averages
78.38
High
88.00
Current: 70.400
Low
72.00
Averages
78.38
High
88.00
About AOS
A. O. Smith Corporation applies technologies and solutions to products manufactured and marketed worldwide. The Company operates through two segments: North America and Rest of World. Both the segments manufacture and market a comprehensive line of residential and commercial gas and electric water heaters, boilers, tanks, and water treatment products. Its Rest of World segment is primarily comprised of China, Europe, and India. The North America segment serves residential and commercial end markets with a range of products, including water heaters, boilers, water treatment products, and others. The Company also manufactures expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, related products and parts. Its Lochinvar brand is a residential and commercial boiler brand in the United States. Its water softener branded products and problem well water solutions include the Hague, Water-Right, Master Water, Atlantic Filter, Impact, and Water Tec brands.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
