A. O. Smith vs Watts Water Technologies

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KIRA’s take AI analyst

I put A. O. Smith and Watts Water Technologies 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 $2.4B for Watts Water Technologies, about 1.6 times as much.
Watts Water Technologies grew revenue faster (8.3%, against 0.3%).
A. O. Smith kept more of each dollar of sales as operating profit (19.0% operating margin, against 18.4%).
A. O. Smith earned a higher return on the capital invested in it (30.7%, against 20.5%).
Investors pay more for each dollar of Watts Water Technologies’s earnings: a P/E of 32.1x 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

5/11

Operating marginNet marginReturn on capitalReturn on equityShare count change

Watts Water Technologies

WTS

6/11

Revenue growth5-year growthGross marginFCF marginPiotroski F-scoreNet debt / EBITDA

Side by side

Best in the row

Latest fiscal year	AOS FY25	WTS FY25
Size
Market cap	$8.5B	$12.3B
Revenue	$3.8B	$2.4B
Free cash flow	$546M	$356M
Net income	$546M	$341M
Growth
Revenue growth	0.3%	8.3%
5-year growth	5.8%	10.1%
Share count change	−3.5%	0.0%
Profitability
Gross margin	38.8%	49.5%
Operating margin	19.0%	18.4%
Net margin	14.3%	14.0%
FCF margin	14.3%	14.6%
Return on capital	30.7%	20.5%
Return on equity	29.2%	18.3%
Balance sheet
Net debt	−$38.2M	−$205M
Net debt / EBITDA	−0.1x	−0.4x
Dividends and buybacks	$597M	$82.9M
Valuation & quality
P/E	17.2x	32.1x
Piotroski F-score	7	8

Ten years

Revenue

FY16

AOS $2.7B

WTS $1.4B

FY17

AOS $3.0B

WTS $1.5B

FY18

AOS $3.2B

WTS $1.6B

FY19

AOS $3.0B

WTS $1.6B

FY20

AOS $2.9B

WTS $1.5B

FY21

AOS $3.5B

WTS $1.8B

FY22

AOS $3.8B

WTS $2.0B

FY23

AOS $3.9B

WTS $2.1B

FY24

AOS $3.8B

WTS $2.3B

FY25

AOS $3.8B

WTS $2.4B

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25

AOS WTS

Operating margin

FY16

AOS 19.2%

WTS 10.4%

FY17

AOS 19.3%

WTS 11.1%

FY18

AOS 19.2%

WTS 12.0%

FY19

AOS 17.7%

WTS 12.3%

FY20

AOS 17.4%

WTS 12.0%

FY21

AOS 19.3%

WTS 13.2%

FY22

AOS 9.6%

WTS 15.9%

FY23

AOS 19.4%

WTS 17.1%

FY24

AOS 18.5%

WTS 17.3%

FY25

AOS 19.0%

WTS 18.4%

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25

AOS WTS

Free cash flow

FY16

AOS $366M

WTS $102M

FY17

AOS $232M

WTS $127M

FY18

AOS $364M

WTS $134M

FY19

AOS $392M

WTS $165M

FY20

AOS $505M

WTS $185M

FY21

AOS $566M

WTS $154M

FY22

AOS $321M

WTS $196M

FY23

AOS $598M

WTS $281M

FY24

AOS $474M

WTS $326M

FY25

AOS $546M

WTS $356M

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25

AOS WTS

Return on capital

FY16

AOS 34.2%

WTS 9.4%

FY17

AOS 28.4%

WTS 7.9%

FY18

AOS 38.6%

WTS 13.2%

FY19

AOS 30.8%

WTS 13.3%

FY20

AOS 29.3%

WTS 11.7%

FY21

AOS 39.8%

WTS 15.9%

FY22

AOS 24.1%

WTS 23.2%

FY23

AOS 35.2%

WTS 20.2%

FY24

AOS 31.6%

WTS 19.7%

FY25

AOS 30.7%

WTS 20.5%

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25

AOS WTS

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.