Is A. O. Smith Corp. overvalued or undervalued?

As of 7 July 2025, the valuation grade for A. O. Smith Corp. moved from expensive to fair, indicating a more favorable assessment of its stock price. The company appears fairly valued based on its current metrics, with a P/E ratio of 22, an EV to EBITDA of 15.25, and a Price to Book Value of 6.42. In comparison, its peer SPX Technologies, Inc. has a significantly higher P/E ratio of 45.73, while Simpson Manufacturing Co., Inc. shows a P/E of 26.38, both categorized as very expensive.
Despite the fair valuation, A. O. Smith Corp. has underperformed against the S&P 500 in the short term, with a 1-year return of -11.85% compared to the index's 17.14%. However, over the longer term, the company's 3-year return of 41.28% is notable, although it still lags behind the S&P 500's 70.41% return. Overall, A. O. Smith Corp. presents a reasonable investment opportunity given its fair valuation relative to peers, despite recent underperformance in stock returns.