I've been keeping an eye on A. O. Smith Corporation (NYSE:AOS) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe AOS has a lot to offer. Basically, it is a company with great financial health as well as a a great track record of performance. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on A. O. Smith here.
Solid track record with excellent balance sheet
In the previous year, AOS has ramped up its bottom line by 28%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 24%, which is what investors like to see! AOS's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that AOS has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. AOS seems to have put its debt to good use, generating operating cash levels of 1.17x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For A. O. Smith, there are three important factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for AOS’s future growth? Take a look at our free research report of analyst consensus for AOS’s outlook.
- Valuation: What is AOS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AOS is currently mispriced by the market.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AOS? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.