Below are the valuation targets for A.O. Smith (AOS) for the next 10 years.
Our valuation targets for A.O. Smith in 2018 are:
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$77.88 (overvalued)
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$53.13 (fair value)
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$28.38 (undervalued)
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$18.70 (extreme undervalue)
The valuation targets for AOS are based on a dividend growth rate of 7.75% which is derived from one half the lowest calculated growth rate as indicated on the Value Line Investment Survey dated July 13, 2018 and applied to Edson Gould’s Altimeter. A graphical representation of the overvalued, fair value, and undervalued levels are below.
The above Altimeter translates into the following undervalued and overvalued ranges since 1983:
10-Year Targets
| Year | Undervalued | Fair Value | Overvalued | Extreme Undervalue |
| 2018 | $28.38 | $53.13 | $77.88 | $18.70 |
| 2019 | $30.51 | $57.11 | $83.72 | $20.10 |
| 2020 | $32.80 | $61.40 | $90.00 | $21.61 |
| 2021 | $35.26 | $66.00 | $96.75 | $23.23 |
| 2022 | $37.90 | $70.95 | $104.01 | $24.97 |
| 2023 | $40.74 | $76.27 | $111.81 | $26.85 |
| 2024 | $43.80 | $82.00 | $120.19 | $28.86 |
| 2025 | $47.08 | $88.15 | $129.21 | $31.02 |
| 2026 | $50.62 | $94.76 | $138.90 | $33.35 |
| 2027 | $54.41 | $101.86 | $149.31 | $35.85 |
| 2028 | $58.49 | $109.50 | $160.51 | $38.54 |
| 2029 | $62.88 | $117.72 | $172.55 | $41.43 |
| 2030 | $67.59 | $126.54 | $185.49 | $44.54 |
| 2031 | $72.66 | $136.03 | $199.40 | $47.88 |
Observations
According to Value Line Investment Survey, A.O. Smith has an expected price range of $60-$95 by 2021-2023. On our end, we have a range from as low as $35.26 to as high as $111.81 in the same period of time.
To get at better sense of the quality of the forecasts that we’ve arrived at, we recommend reviewing our Investment Guide to NLO 10-Year Targets.
Last Update: November 27, 2018