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A. O. Smith Corporation (AOS)

Company Dividend Discount ModelIndustry: Industrial - MachinerySector: Industrials

Valuation Snapshot

Stable Growth$49.93 - $87.56$65.95
Multi-Stage$53.84 - $58.89$56.32
Blended Fair Value$61.14
Current Price$73.41
Upside-16.72%
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 Rate9.10%9.10%9.10%
Growth Rate3.00%4.00%5.00%
Fair Value$49.93$65.95$87.56
Upside / Downside-31.98%-10.16%19.28%

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 Rate9.10%9.10%9.10%
Growth Rate3.00%4.00%5.00%
Year 1 PV (M)237.13239.43241.73
Year 2 PV (M)274.29279.64285.04
Year 3 PV (M)306.55315.57324.76
Year 4 PV (M)334.35347.52361.09
Year 5 PV (M)358.08375.80394.22
PV of Terminal Value (M)6,216.276,523.956,843.70
Equity Value (M)7,726.668,081.928,450.54
Shares Outstanding (M)143.51143.51143.51
Fair Value$53.84$56.32$58.89
Upside / Downside-26.66%-23.28%-19.79%

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