AOS
A. O. Smith Corporation
$58.85
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 8.0% below fair value
You pay
$58.85
Bear
$51.18
Fair
$63.97
Bull
$76.77
Bear
$51.18
-13.0%
$4.06 × 12x P/E
Fair
$63.97
+8.7%
$4.06 × 15x P/E
Bull
$76.77
+30.4%
$4.06 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
14.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $71.20 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $63.97 per share.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples