We publish no single base value for A. O. Smith. Our valuation methods put it between $41.67 and $47.99 a share. The valuation code's reason: no point fair value: the two anchors behind it compound the same growth rate and differ only in how they end — a perpetuity at the terminal rate against a multiple on the final year — so the midpoint between them measures terminal treatment rather than what the business is worth. The published range is the same reading with the false precision removed: read it as the span the method supports, and treat neither edge as a point estimate.
| Method | Value | vs price | Basis |
|---|---|---|---|
| Discounted cash flow | $47.99 | -25.0% | free cash flow $561.70m, growth -0.71% for 5 years, then fading to 3% over 5 more, discounted at 10.12%; stress floor $38.67 |
| Exit multiple (P/E) | $41.67 | -34.9% | earnings per share $3.48 valued at 18.53× (the stock's own median P/E) in 5 years, discounted back |
| Sum of the parts | — | — | no sum of the parts: this run holds no segment disclosure for the name |
| Price to sales | — | — | not reached: the cash-flow or earnings methods produced an anchor, so this fallback was not run |
| Tangible book | — | — | used only for lenders, where book value is the business |
| Price to FFO (REITs) | — | — | used only for REITs |
Each working is rebuilt by code from the valuation's own figures and checked against the published value.
The discount rate:
| Risk-free rate | 5.13% (10-year US Treasury yield) |
| Company's own beta | 1.02 (5 years of monthly returns against the S&P 500; standard error 0.20) |
| Peer beta | 1.19 (median of 6 S&P 500 Building Products companies) |
| Blend of own and peers | 1.16 (20% own, 80% peers, weighted by how precisely the company's own beta is measured) |
| Adjusted beta | 1.11 (0.67 × 1.16 + 0.33, pulled toward the market's 1.0) |
| Equity risk premium | 4.5% |
| Discount rate = risk-free + adjusted beta × premium | 10.12% |
Free cash flow grows -0.71% a year for 5 years, then fades in equal steps toward 3% over 5 more; each year is discounted by 1 ÷ (1 + rate)^year:
| Year | Growth | Free cash flow | Discount factor | Present value |
|---|---|---|---|---|
| Now | — | $561.70m | — | — |
| Year 1 | -0.71% | $557.71m | 0.9081 | $506.44m |
| Year 2 | -0.71% | $553.75m | 0.8246 | $456.61m |
| Year 3 | -0.71% | $549.82m | 0.7488 | $411.68m |
| Year 4 | -0.71% | $545.92m | 0.6799 | $371.18m |
| Year 5 | -0.71% | $542.04m | 0.6174 | $334.66m |
| Year 6 | -0.09% | $541.54m | 0.5606 | $303.61m |
| Year 7 | 0.53% | $544.40m | 0.5091 | $277.15m |
| Year 8 | 1.14% | $550.63m | 0.4623 | $254.55m |
| Year 9 | 1.76% | $560.34m | 0.4198 | $235.22m |
| Year 10 | 2.38% | $573.68m | 0.3812 | $218.68m |
| Terminal value = year-10 cash flow × (1 + 3%) ÷ (10.12% − 3%) | $8.29bn |
| Terminal value in today's money | $3.16bn |
| Present value of years 1–10 | $3.37bn |
| Total present value | $6.53bn |
| Shares outstanding | 136.10m |
| Value per share = total ÷ shares | $47.99 |
How the DCF value moves with the discount rate and the starting growth (the middle cell is the published value):
| Discount rate | Growth -5.71% | Growth -0.71% | Growth 4.29% |
|---|---|---|---|
| 9.12% | $40.94 | $55.46 | $75.01 |
| 10.12% | $35.78 | $47.99 | $64.34 |
| 11.12% | $31.86 | $42.34 | $56.31 |
The same DCF at each beta, starting growth unchanged:
| Beta | Value | Discount rate | DCF value |
|---|---|---|---|
| Company's own beta | 1.02 | 9.72% | $50.75 |
| Peer beta | 1.19 | 10.48% | $45.78 |
| Adjusted beta (used) | 1.11 | 10.12% | $47.99 |
Earnings per share grow on the same fading path as the DCF:
| Year | Growth | Earnings per share |
|---|---|---|
| Now | — | $3.48 |
| Year 1 | -0.71% | $3.45 |
| Year 2 | 0.40% | $3.47 |
| Year 3 | 1.18% | $3.51 |
| Year 4 | 1.73% | $3.57 |
| Year 5 | 2.11% | $3.64 |
| Earnings per share in year 5 | $3.64 |
| Exit P/E (the stock's own median P/E) | 18.53× |
| Value in 5 years = earnings × P/E | $67.50 |
| Discounted at 10.12% over 5 years: ÷ 1.6197 | $41.67 |
We publish no single base value for A. O. Smith. Our valuation methods put it between $41.67 and $47.99 a share. The valuation code's reason: no point fair value: the two anchors behind it compound the same growth rate and differ only in how they end — a perpetuity at the terminal rate against a multiple on the final year — so the midpoint between them measures terminal treatment rather than what the business is worth. The published range is the same reading with the false precision removed: read it as the span the method supports, and treat neither edge as a point estimate.
One-year price simulation: a 10% chance the price is below $46.35 and a 10% chance it is above $98.73 in a year; a 58% chance it is higher than today's $63.98, from 29.35% volatility. The simulation assumes the price drifts up at our discount rate of 10.12% a year.
At $63.98 the price implies free cash flow growing 4.2% a year for five years and then fading toward 3% over five more; its revenue has grown -0.7%.
| Week | Price | Base value |
|---|---|---|
| 2 Oct 2026 | $56.75 | — |
| 9 Oct 2026 | $56.38 | — |
| 16 Oct 2026 | $59.22 | — |
| 23 Oct 2026 | $61.65 | — |
| 30 Oct 2026 | $63.07 | — |
| 6 Nov 2026 | $64.55 | — |
| 12 Nov 2026 | $63.98 | — |
Data as of 12 Nov 2026; financials to 30 Sep 2026. Sources: company filings via EODHD, SEC EDGAR, US Treasury. How these values are computed. Not investment advice.
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