Discounted Cash Flow (DCF) Analysis Unlevered

A. O. Smith Corporation (AOS)

$55.82

+1.69 (+3.12%)

All numbers are in Millions, Currency in USD

Stock DCF: 48.60 | 55.82 | overvalue

Operating Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	2,996.70	3,187.90	2,992.70	2,895.30	3,538.90	3,709.05	3,887.38	4,074.28	4,270.17	4,475.48
Revenue (%)
EBITDA	601	638.10	561.40	531.20	707.80	720.88	755.54	791.86	829.93	869.84
EBITDA (%)
EBIT	530.90	566.20	483.10	451.20	629.90	630.56	660.88	692.65	725.95	760.86
EBIT (%)
Depreciation	70.10	71.90	78.30	80	77.90	90.32	94.66	99.21	103.98	108.98
Depreciation (%)

Balance Sheet Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Total Cash	820	645	551.40	689.60	631.40	798.79	837.19	877.44	919.63	963.84
Total Cash (%)
Account Receivables	598.40	647.30	589.50	585	634.40	727.74	762.73	799.40	837.83	878.12
Account Receivables (%)
Inventories	291.20	304.70	303	300.10	447.70	388.83	407.52	427.11	447.65	469.17
Inventories (%)
Accounts Payable	535	543.80	509.60	595.20	745.90	694.14	727.51	762.49	799.15	837.58
Accounts Payable (%)
Capital Expenditure	-94.20	-85.20	-64.40	-56.80	-75.10	-89.40	-93.70	-98.21	-102.93	-107.88
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 55.82
Beta	1.147
Diluted Shares Outstanding	162.60
Cost of Debt
Tax Rate	22.14
After-tax Cost of Debt	1.53%
Risk-Free Rate
Market Risk Premium
Cost of Equity	8.539
Total Debt	219
Total Equity	9,076.56
Total Capital	9,295.56
Debt Weighting	2.36
Equity Weighting	97.64
Wacc

Build Up Free Cash

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	2,996.70	3,187.90	2,992.70	2,895.30	3,538.90	3,709.05	3,887.38	4,074.28	4,270.17	4,475.48
EBITDA	601	638.10	561.40	531.20	707.80	720.88	755.54	791.86	829.93	869.84
EBIT	530.90	566.20	483.10	451.20	629.90	630.56	660.88	692.65	725.95	760.86
Tax Rate	43.07%	20.37%	21.63%	22.30%	22.14%	25.90%	25.90%	25.90%	25.90%	25.90%
EBIAT	302.25	450.89	378.62	350.57	490.45	467.24	489.71	513.25	537.93	563.79
Depreciation	70.10	71.90	78.30	80	77.90	90.32	94.66	99.21	103.98	108.98
Accounts Receivable	-	-48.90	57.80	4.50	-49.40	-93.34	-34.99	-36.67	-38.43	-40.28
Inventories	-	-13.50	1.70	2.90	-147.60	58.87	-18.69	-19.59	-20.54	-21.52
Accounts Payable	-	8.80	-34.20	85.60	150.70	-51.76	33.37	34.98	36.66	38.42
Capital Expenditure	-94.20	-85.20	-64.40	-56.80	-75.10	-89.40	-93.70	-98.21	-102.93	-107.88
UFCF	278.15	383.99	417.82	466.77	446.95	381.93	470.36	492.97	516.67	541.51
WACC
PV UFCF						352.44	400.51	387.34	374.61	362.30
SUM PV UFCF										1,877.19

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	8.37
Free cash flow (t + 1)	552.34
Terminal Value	8,671.03
Present Value of Terminal Value	5,801.30

Intrinsic Value

Enterprise Value	7,678.49
Net Debt	-224.30
Equity Value	7,902.79
Shares Outstanding	162.60
Equity Value Per Share	48.60