A. O. Smith Corporation (AOS): fair value, margin of safety and Wheel Score

Is AOS undervalued?

At 59.47 (close of 16 Oct 2026), AOS trades 20% under the GLS average fair value of 74.36. 5 of the 9 models that produced a value land above the price. A discount of this size counts as a positive margin of safety in every GLS screen; whether it is enough depends on the rest of the picture - the health score, the moat and the option premium below.

There is a wide gap between DDM (21.19) and Payback Time (148.73). When the models are this far apart the "fair value" is really a range, and the margin of safety above should be read with that range in mind.

The nightly engine files AOS under Value: positive earnings at a P/E of 18 or less.

Nine valuation models for AOS

Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.

Quality and financial health

A. O. Smith Corporation scores 5 of 9 on the Piotroski F-score: a middling result that falls one point short of the Sunday Scan's "6 or more" rule. Some of the nine tests on profitability, leverage and efficiency are failed, so the accounts are worth a look before selling a put on the name. On durability AOS scores 7.1/10 on the GLS Moat - a middle reading; the Scorecard on the Quote page's Financials tab shows which ten-year lines are steady and which are not.

Returns on capital are high - ROIC 26.6%, ROE 29.4%, ROA 17.4% - with debt at 0.10 times equity and a free-cash-flow yield of 7.9%.

The dividend yield is 2.42% at a payout ratio of 40%; for a wheel trader holding assigned shares the dividend adds to the covered-call premium, and the ex-dividend date is worth knowing before a call is sold. Revenue comes mainly from Reportable Segments 100% (quarter Q2 FY2026).

Institutional ownership scores 10/10, insider activity 1/10 and Congressional trading 5/10 on the GLS smart-money scales.

Wheel Score 82: Prime

With a Wheel Score of 82, A. O. Smith Corporation sits in the Prime band - price, quality and premium all line up for the wheel strategy. The parts: Value 21/25, Health 11/20, Moat 11/15, Premium 20/20, Stability 19/20. A high score is a ranking, not a signal: it says nothing about timing, the earnings date or your position size.

Implied volatility is 37% on the near-the-money contracts 20-60 days out - inside the 35-60% range the Wheel Score pays full marks for: enough premium to be worth selling, not so much that the risk is unpaid. Chain open interest is 9,634 contracts across all expiries - enough for the wheel at normal size.

Volume runs at 1.8M shares a day on a market cap of $8.1B, with a beta of 1.11; the Stability part of the Wheel Score gives that 19 of 20.

The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.

Upcoming events

A. O. Smith Corporation reports earnings on 27 Oct 2026 (before the open) - inside the 14-day window the Sunday Scan avoids, because a put sold now would carry the report's gap risk. The shares go ex-dividend on 30 Oct 2026 (0.3800 per share), so a covered call sold before then carries a small early-assignment risk around that date.

Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.

Similar stocks in Industrial - Machinery

The 12 companies below are the closest to A. O. Smith Corporation by market cap within the Industrial - Machinery industry, each with its own fact sheet; the Compare page puts up to eight of them side by side.

⚖ Compare AOS with 7 of them   All Industrials stocks →