MeritValue

SMITH A O CORP

AOSdata completeness 100%18 fiscal years on file

Data notes: no data for concept 'investmentsAtFairValue'; no data for concept 'netInvestmentIncome'; no data for concept 'realEstateImpairment'

The thesis, from the filings

SMITH A O CORP earns about 25% on invested capital, far above its ~9% cost of capital, and has bought back 12% of its shares over 5 years — the marks of a durable business run for its owners. The estimate methods put fair value between $38.6 and $60.07 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$3.54B1$3.75B1$3.85B2$3.82B2$3.83B2
Net income$487.1M3$235.7M3$556.6M4$533.6M4$546.2M4
Operating cash flow$641.1M5$391.4M5$670.3M6$581.8M6$616.8M6
Capital expenditure$75.1M7$70.3M7$72.6M8$108M8$70.8M8
Free cash flow (derived)$566M5$321.1M5$597.7M6$473.8M6$546M6
Total debt$393.4M9$689M10$254.6M10$386.4M11$310M11
Cash & equivalents$443.3M12$391.2M13$339.9M13$239.6M14$174.5M14
Diluted shares161.3M155.8M151.0M147.1M141.9M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$130.92
your share of equity
Profit it earned you last year
$38.49
Free cash flow it threw off
$38.47
Debt you’d be carrying
$21.84

10 shares is a claim on $130.92 of net worth that earned you $38.49 and generated $38.47 of cash last year, against $21.84 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
25% avg · 5y
FY21 28%FY22 11%FY23 32%FY24 27%FY25 28%

It earned about 25% on invested capital, year after year, against a ~9% cost of capital — the footprint of real pricing power. Competition usually drags returns like this back down; here it hasn't.

seeing a moat in the numbers →
Management signal · capital allocation
−12% shares · 5y

Share count is down 12% over 5 years — management has been buying back stock, quietly handing owners a bigger slice. Total debt has fallen 21% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.5.0

The 3 estimate methods that apply put fair value between $38.6 and $60.07 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$60.07
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth2.6%
  • fcfBase$546M
DCF · Growth Exit 5Y
$59.85
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth2.6%
  • fcfBase$546M
Earnings Power Value
$38.6
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$533.6M
  • growthAssumed0.0%
Graham Number
$33.68
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years2.6%
Discount rate (WACC)9.02%
Terminal growth2.5%
At your growth, a share is worth $59.85
The three cases
Bear0.0%$53.29
Base2.6%$59.85
Bull7.6%$74.26

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 2.6%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000091142-24-000041 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2023-12-31 · accession 0000091142-26-000008 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2021-12-31 · accession 0000091142-24-000041 (NetIncomeLoss)
  4. 10-K · period ending 2023-12-31 · accession 0000091142-26-000008 (NetIncomeLoss)
  5. 10-K · period ending 2021-12-31 · accession 0000091142-24-000041 (NetCashProvidedByUsedInOperatingActivities)
  6. 10-K · period ending 2023-12-31 · accession 0000091142-26-000008 (NetCashProvidedByUsedInOperatingActivities)
  7. 10-K · period ending 2021-12-31 · accession 0000091142-24-000041 (PaymentsToAcquireProductiveAssets)
  8. 10-K · period ending 2023-12-31 · accession 0000091142-26-000008 (PaymentsToAcquireProductiveAssets)
  9. 10-K · period ending 2021-12-31 · accession 0000091142-23-000025 (LongTermDebtNoncurrent)
  10. 10-K · period ending 2022-12-31 · accession 0000091142-24-000041 (LongTermDebtNoncurrent)
  11. 10-K · period ending 2024-12-31 · accession 0000091142-26-000008 (LongTermDebtNoncurrent)
  12. 10-K · period ending 2021-12-31 · accession 0000091142-23-000025 (CashAndCashEquivalentsAtCarryingValue)
  13. 10-K · period ending 2022-12-31 · accession 0000091142-24-000041 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2024-12-31 · accession 0000091142-26-000008 (CashAndCashEquivalentsAtCarryingValue)