Allegion vs A. O. Smith
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KIRA’s take AI analyst
I put Allegion and A. O. Smith side by side, using each one’s latest annual report. Here is what stands out:
- Allegion is the larger business, with $4.1B of revenue in fiscal 2025 against $3.8B for A. O. Smith.
- Allegion grew revenue faster (7.8%, against 0.3%).
- Allegion kept more of each dollar of sales as operating profit (21.1% operating margin, against 19.0%).
- Allegion turned more of its sales into free cash flow (16.9% FCF margin, against 14.3%).
- A. O. Smith earned a higher return on the capital invested in it (30.7%, against 21.5%).
- Investors pay more for each dollar of Allegion’s earnings: a P/E of 22.5x 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.
Allegion
ALLE
8/11
Revenue growth5-year growthGross marginOperating marginNet marginFCF marginReturn on equityPiotroski F-score
A. O. Smith
AOS
3/11
Return on capitalNet debt / EBITDAShare count change
Side by side
Best in the row
| Latest fiscal year | ALLE FY25 | AOS FY25 |
|---|---|---|
| Size | ||
| Market cap | $15.4B | $8.6B |
| Revenue | $4.1B | $3.8B |
| Free cash flow | $686M | $546M |
| Net income | $644M | $546M |
| Growth | ||
| Revenue growth | 7.8% | 0.3% |
| 5-year growth | 8.4% | 5.8% |
| Share count change | −1.1% | −3.5% |
| Profitability | ||
| Gross margin | 45.2% | 38.8% |
| Operating margin | 21.1% | 19.0% |
| Net margin | 15.8% | 14.3% |
| FCF margin | 16.9% | 14.3% |
| Return on capital | 21.5% | 30.7% |
| Return on equity | 36.1% | 29.2% |
| Balance sheet | ||
| Net debt | $1.6B | −$38.2M |
| Net debt / EBITDA | 1.6x | −0.1x |
| Dividends and buybacks | $255M | $597M |
| Valuation & quality | ||
| P/E | 22.5x | 17.2x |
| Piotroski F-score | 8 | 7 |
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.