AOS Intrinsic Value

AOS

A.O. Smith Corp. – Heating Equipment (except Warm Air Furnaces) Manufacturing

a. o. smith corporation is one of the world's leading manufacturers of residential and commercial water heaters and boilers, offering a comprehensive product line featuring the best-known brands in north america, china, and india. the company was founded in 1874 in milwaukee, wisconsin where today the company is headquartered. a. o. smith employs approximately 16,100 men and women at operations in the united states, canada, mexico, china, india, the united kingdom, the netherlands, and turkey, which has the global reach to serve customers worldwide. the company also has sales and distribution in more than 60 countries around the world. as a global leader a. o. smith and its employees pride themselves on applying innovative technology and energy-efficient solutions to products marketed worldwide. the company's goal is to be a leading global water technology company, and the focus is on building this platform through new product development, global expansion, strategic acquisitions and p

Analysis Results

Intrinsic Value	$200.70
Latest Price	$76.74
Relative Value	62% undervalued

Share results:

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Cash Flow (Billions)

Analysis Parameters

New Ticker

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 14.3%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 4.2%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 14.3%, 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)
2023	0.671	0.644
2024	0.766	0.706
2025	0.876	0.774
2026	1.0	0.848
2027	1.14	0.93

Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 34.3 billion. This corresponds to a present value of 26.8 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 3.9 billion. Adding in the terminal value gives a total present value of 30.7 billion.

There are presently 153.0 million outstanding shares, so the intrinsic value per share is 200.7.

Financial Statements

The following data was to determine the past cash flows.

Current Assets	1,633,700,000
Current Cash	481,800,000
Current Liabilities	934,200,000
Current Debt	10,000,000
Non-Cash Working Capital (NCWC)	227,700,000
Change in NCWC	218,500,000
EBIT	658,700,000
Tax Provision	-12,000,000
Depreciation and Amortization	76,900,000
Capital Expenditure	-70,300,000
Unlevered Free Cash Flow	883,800,000

Current Assets	1,752,600,000
Current Cash	631,400,000
Current Liabilities	1,118,800,000
Current Debt	6,800,000
Non-Cash Working Capital (NCWC)	9,200,000
Change in NCWC	-39,700,000
EBIT	609,500,000
Tax Provision	138,500,000
Depreciation and Amortization	77,900,000
Capital Expenditure	-75,100,000
Unlevered Free Cash Flow	437,664,338

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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