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A.O. Smith Corp (NYSE:AOS)
Intrinsic Value: Projected FCF
$20.31 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, A.O. Smith Corp's projected FCF intrinsic value is $20.31. The stock price of A.O. Smith Corp is $49.23. Therefore, A.O. Smith Corp's Price to Intrinsic Value: Projected FCF Ratio of today is 2.4.

AOS' s Price to Intrinsic Value: Projected FCF Range Over the Past 10 Years
Min: 0.16   Max: 2.5
Current: 2.42

0.16
2.5

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of A.O. Smith Corp was 2.50. The lowest was 0.16. And the median was 1.09.

AOS's Price to Intrinsic Value: Projected FCF is ranked lower than
73% of the 1003 Companies
in the Global Diversified Industrials industry.

( Industry Median: 1.37 vs. AOS: 2.42 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here A.O. Smith Corp's FCF(6 year avg) is calculate as

A.O. Smith Corp Quarterly Data

201406201409201412201503201506201509201512201603201606201609
total_freecashflow 535980-154615488711088
201112201203201206201209201212201303201306201309201312201403
total_freecashflow 111-17-10564515525660-14
201012201103201106201109
total_freecashflow 40-65-475

Add all the Free Cash Flow together and divide 6 will get A.O. Smith Corp's FCF(6 year avg) = $159.17.

A.O. Smith Corp's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Sep16)*0.8)/Shares Outstanding
=(14.8626533105*159.166666667+1525.6*0.8)/176.548
=20.31

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

A.O. Smith Corp's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=49.23/20.3124305302
=2.42

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A.O. Smith Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Projected FCF 5.777.187.8311.469.499.179.6510.8014.3917.26

A.O. Smith Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Projected FCF 12.7613.5314.3915.6515.9217.0117.2617.9518.7920.31
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