DCF Tool

AOS

A.O. Smith Corp. – Heating Equipment (except Warm Air Furnaces) Manufacturing
A. O. Smith Corporation, with headquarters in Milwaukee, Wis., is a global leader applying innovative technology and energy-efficient solutions to products manufactured and marketed worldwide. The Company is one of the world's leading manufacturers of residential and commercial water heating equipment and boilers, as well as a manufacturer of water treatment and air purification products.
Analysis Results
Intrinsic Value $261.84
Latest Price $57.77
Relative Value 78% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 25.8%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 8.2%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 25.8%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 1.06 0.976
2023 1.33 1.13
2024 1.67 1.32
2025 2.1 1.54
2026 2.65 1.79
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 43.7 billion. This corresponds to a present value of 27.3 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 6.75 billion. Adding in the terminal value gives a total present value of 34.0 billion.

There are presently 130.0 million outstanding shares, so the intrinsic value per share is 261.84.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 3,505,200,000
Current Cash 1,262,800,000
Current Liabilities 2,237,600,000
Current Debt 13,600,000
Non-Cash Working Capital (NCWC) 18,400,000
Change in NCWC -30,500,000
EBIT 1,219,000,000
Tax Provision 277,000,000
Depreciation and Amortization 155,800,000
Capital Expenditure -150,200,000
Unlevered Free Cash Flow 924,228,676
Current Assets 1,618,000,000
Current Cash 689,600,000
Current Liabilities 886,300,000
Current Debt 6,800,000
Non-Cash Working Capital (NCWC) 48,900,000
Change in NCWC -140,400,000
EBIT 447,900,000
Tax Provision 99,000,000
Depreciation and Amortization 80,000,000
Capital Expenditure -56,800,000
Unlevered Free Cash Flow 230,807,907
Current Assets 1,500,400,000
Current Cash 551,400,000
Current Liabilities 766,500,000
Current Debt 6,800,000
Non-Cash Working Capital (NCWC) 189,300,000
Change in NCWC -18,900,000
EBIT 465,100,000
Tax Provision 102,100,000
Depreciation and Amortization 78,300,000
Capital Expenditure -64,400,000
Unlevered Free Cash Flow 359,513,874
Current Assets 1,638,500,000
Current Cash 645,000,000
Current Liabilities 785,300,000
Current Debt 0
Non-Cash Working Capital (NCWC) 208,200,000
Change in NCWC 42,400,000
EBIT 551,700,000
Tax Provision 113,600,000
Depreciation and Amortization 71,900,000
Capital Expenditure -85,200,000
Unlevered Free Cash Flow 468,442,309
Current Assets 1,766,800,000
Current Cash 820,000,000
Current Liabilities 788,500,000
Current Debt 7,500,000
Non-Cash Working Capital (NCWC) 165,800,000
Change in NCWC 116,800,000
EBIT 520,500,000
Tax Provision 224,300,000
Depreciation and Amortization 70,100,000
Capital Expenditure -94,200,000
Unlevered Free Cash Flow 389,029,205
Current Assets 1,562,000,000
Current Cash 754,600,000
Current Liabilities 765,600,000
Current Debt 7,200,000
Non-Cash Working Capital (NCWC) 49,000,000
Change in NCWC -120,800,000
EBIT 460,400,000
Tax Provision 136,000,000
Depreciation and Amortization 65,100,000
Capital Expenditure -80,700,000
Unlevered Free Cash Flow 188,617,513
Current Assets 1,455,300,000
Current Cash 645,200,000
Current Liabilities 653,200,000
Current Debt 12,900,000
Non-Cash Working Capital (NCWC) 169,800,000
Change in NCWC -15,800,000
EBIT 399,100,000
Tax Provision 119,600,000
Depreciation and Amortization 63,000,000
Capital Expenditure -72,700,000
Unlevered Free Cash Flow 255,010,285
Current Assets 1,319,000,000
Current Cash 541,900,000
Current Liabilities 605,200,000
Current Debt 13,700,000
Non-Cash Working Capital (NCWC) 185,600,000
Change in NCWC 42,700,000
EBIT 287,200,000
Tax Provision 78,900,000
Depreciation and Amortization 59,800,000
Capital Expenditure -86,100,000
Unlevered Free Cash Flow 224,562,399
Current Assets 1,205,600,000
Current Cash 486,000,000
Current Liabilities 590,900,000
Current Debt 14,200,000
Non-Cash Working Capital (NCWC) 142,900,000
Change in NCWC -21,000,000
EBIT 249,300,000
Tax Provision 66,700,000
Depreciation and Amortization 59,700,000
Capital Expenditure -97,700,000
Unlevered Free Cash Flow 119,960,279
Current Assets 1,107,200,000
Current Cash 462,900,000
Current Liabilities 499,000,000
Current Debt 18,600,000
Non-Cash Working Capital (NCWC) 163,900,000
Change in NCWC 82,300,000
EBIT 201,500,000
Tax Provision 71,200,000
Depreciation and Amortization 54,600,000
Capital Expenditure -69,900,000
Unlevered Free Cash Flow 207,136,441

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