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A. O. Smith Corporation (AOS)

Company Dividend Discount ModelIndustry: Industrial - MachinerySector: Industrials

Valuation Snapshot

Stable Growth$50.08 - $87.95$66.19
Multi-Stage$54.01 - $59.07$56.49
Blended Fair Value$61.34
Current Price$73.41
Upside-16.44%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS5.00%13.35%1.331.281.231.191.111.040.910.680.590.47
YoY Growth--3.76%3.56%4.17%7.18%6.37%14.68%34.26%15.08%24.19%24.63%
Dividend Yield--2.03%1.44%1.79%1.86%1.64%2.75%1.68%1.06%1.15%1.24%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)530.50
(-) Cash Dividends Paid (M)194.60
(=) Cash Retained (M)335.90
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)106.1066.3139.79
Cash Retained (M)335.90335.90335.90
(-) Cash Required (M)-106.10-66.31-39.79
(=) Excess Retained (M)229.80269.59296.11
(/) Shares Outstanding (M)143.51143.51143.51
(=) Excess Retained per Share1.601.882.06
LTM Dividend per Share1.361.361.36
(+) Excess Retained per Share1.601.882.06
(=) Adjusted Dividend2.963.233.42
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate3.00%4.00%5.00%
Fair Value$50.08$66.19$87.95
Upside / Downside-31.78%-9.84%19.80%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)530.50551.71573.76596.70620.55645.36664.72
Payout Ratio36.68%47.35%58.01%68.67%79.34%90.00%92.50%
Projected Dividends (M)194.60261.21332.84409.77492.33580.83614.87

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate3.00%4.00%5.00%
Year 1 PV (M)237.16239.47241.77
Year 2 PV (M)274.38279.73285.14
Year 3 PV (M)306.70315.72324.92
Year 4 PV (M)334.57347.75361.32
Year 5 PV (M)358.38376.11394.55
PV of Terminal Value (M)6,239.826,548.676,869.63
Equity Value (M)7,751.018,107.468,477.33
Shares Outstanding (M)143.51143.51143.51
Fair Value$54.01$56.49$59.07
Upside / Downside-26.43%-23.04%-19.53%

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