Is AOS a high-quality business?

AlphaMadera's AlphaQuality grade scores A. O. Smith Corporation on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how AOS compares to a Buffett-style quality bar.

What is A. O. Smith Corporation's AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to AOS based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes AOS a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

AOS - A. O. Smith Corporation

Price: -- -- | CONSENSUS: Hold DETAILS | PRICE TARGET: $72.67 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Stable Earnings Power

AlphaQuality — archetype-weighted quantitative grade

A- 82.1 / 100 composite

Composite Grade

Composite of six pillars weighted for stable earnings power businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 20%

A 88.2

5yr Avg ROIC 22.7% 96/100
Operating Margin Trend +0.48 pp/yr 69/100

Capital Efficiency

Weight: 15%

A+ 98.7

5yr Avg ROE 25.4% 100/100
5yr Share-Count CAGR -3.5% 96/100

Growth Quality

Weight: 15%

C 54.1

5yr Revenue CAGR 2.0% 37/100
5yr EPS CAGR 6.3% 62/100
Revenue-Growth Years (5) 4/5 80/100

Cash Generation

Weight: 15%

A 87.2

5yr FCF Margin 13.3% 78/100
5yr FCF/NI Conversion 1.10x 98/100

Balance Sheet

Weight: 20%

A+ 97.8

Net Debt / EBITDA -0.00x 95/100
Interest Coverage (EBIT/Int) 54.03x 100/100
Altman Z-Score 6.09 100/100

Stability

Weight: 15%

C+ 59.0

EPS Volatility (σ/μ) 0.35 50/100
Piotroski F-Score 5 56/100
Negative-Revenue Years (5) 1/5 80/100

2 of 2 gurus held; 2 added; 2 full exits.

Holders: 2
Avg Δ position: +135.1%
New buys: 0
Full exits: 2

Dalio sold -100%
Wood sold -100%
Greenblatt increased +135%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (20%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (15%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (15%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (20%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (15%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.