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A. O. Smith Corporation (AOS) vs Graco Inc. (GGG)

A. O. Smith Corporation and Graco Inc. are both Specialty Industrial Machinery companies. Graco Inc. is the larger, with a market value of $10.9B against $8.9B — 1.2× the size. A. O. Smith Corporation trades at the lower P/E: 18.5× against 21.5×. Graco Inc. grew revenue faster over the last twelve months: 5.39% against −0.71%. Graco Inc. has the higher net margin (22.4% vs 13.0%) and the lower return on invested capital (15.9% vs 19.1%). Both pay a dividend; A. O. Smith Corporation yields more (2.20% vs 1.73%). Across the 23 metrics below, Graco Inc. leads on 12 and A. O. Smith Corporation on 11.

Valuation

Metric AOS GGG Specialty Industrial Machinery median
P/E 18.46 21.53 25.64
P/S 2.36 4.74 2.81
P/B 4.93 4.44 2.99
Price to free cash flow 15.99 18.26 23.82
EV/EBITDA 11.99 14.99 15.15
EV/Sales 2.48 4.73 2.77
Earnings yield 5.42% 4.65% 3.07%
Free cash flow yield 6.25% 5.48% 3.67%

Profitability

Metric AOS GGG Specialty Industrial Machinery median
Gross margin 38.62% 51.96% 35.46%
Operating margin 18.17% 26.82% 10.04%
Net margin 13.01% 22.40% 7.24%
Free cash flow margin 14.77% 25.98% 9.04%
Return on equity 26.97% 20.38% 10.73%
Return on assets 14.49% 15.93% 4.51%
Return on invested capital 19.09% 15.91% 5.00%

Growth

Metric AOS GGG Specialty Industrial Machinery median
Revenue growth (TTM) (0.71%) 5.39% 6.59%
EPS growth (last fiscal year) 6.06% 9.22% 5.97%
Revenue growth, 5-year CAGR 5.76% 6.27% 8.53%
Net income growth, 5-year CAGR 9.63% 9.57% 6.58%

Health

Metric AOS GGG Specialty Industrial Machinery median
Debt to equity 0.37 0.04 0.33
Current ratio 1.64 2.13 2.08
Net debt to EBITDA (0.05) (0.85) 1.32

Dividend

Metric AOS GGG Specialty Industrial Machinery median
Dividend yield 2.20% 1.73% 1.11%
Payout ratio 0.41 0.38 0.31

Size

Metric AOS GGG Specialty Industrial Machinery median
Market cap 8.94b 10.90b 2.19b

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