A. O. Smith vs Advanced Drainage Systems
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KIRA’s take AI analyst
I put A. O. Smith and Advanced Drainage Systems side by side, using each one’s latest annual report. Here is what stands out:
- A. O. Smith is the larger business, with $3.8B of revenue in fiscal 2025 against $3.1B for Advanced Drainage Systems.
- Advanced Drainage Systems grew revenue faster (5.0%, against 0.3%).
- Advanced Drainage Systems kept more of each dollar of sales as operating profit (20.3% operating margin, against 19.0%).
- Advanced Drainage Systems turned more of its sales into free cash flow (18.7% FCF margin, against 14.3%).
- A. O. Smith earned a higher return on the capital invested in it (30.7%, against 15.8%).
- Investors pay more for each dollar of Advanced Drainage Systems’s earnings: a P/E of 22.7x against 17.2x for A. O. Smith.
Who comes out ahead
Of the 11 measures where higher (or lower) is clearly better, how many each company leads.
A. O. Smith
AOS
7/11
Gross marginNet marginReturn on capitalReturn on equityPiotroski F-scoreNet debt / EBITDAShare count change
Advanced Drainage Systems
WMS
4/11
Revenue growth5-year growthOperating marginFCF margin
Side by side
Best in the row
| Latest fiscal year | AOS FY25 | WMS FY26 |
|---|---|---|
| Size | ||
| Market cap | $8.5B | $10.1B |
| Revenue | $3.8B | $3.1B |
| Free cash flow | $546M | $569M |
| Net income | $546M | $427M |
| Growth | ||
| Revenue growth | 0.3% | 5.0% |
| 5-year growth | 5.8% | 9.0% |
| Share count change | −3.5% | 0.3% |
| Profitability | ||
| Gross margin | 38.8% | 38.3% |
| Operating margin | 19.0% | 20.3% |
| Net margin | 14.3% | 14.0% |
| FCF margin | 14.3% | 18.7% |
| Return on capital | 30.7% | 15.8% |
| Return on equity | 29.2% | 25.2% |
| Balance sheet | ||
| Net debt | −$38.2M | $1.6B |
| Net debt / EBITDA | −0.1x | 1.9x |
| Dividends and buybacks | $597M | $148M |
| Valuation & quality | ||
| P/E | 17.2x | 22.7x |
| Piotroski F-score | 7 | 4 |
Ten years
Revenue
Operating margin
Free cash flow
Return on capital
Each company's latest fiscal year; fiscal years end in different months. The best value in each row is highlighted where higher (or lower) is clearly better. Not investment advice.