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A. O. Smith Corporation (AOS) vs Morgan Stanley (MS)

AOS
A. O. Smith Corporation
$64.54
VS
MS
Morgan Stanley
$158.55

Rewards

AOS
  • ★A. O. Smith Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
  • ★A. O. Smith Corporation scores 95/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
  • ★Free cash flow has grown at a 19.4% CAGR over the past 4 years, demonstrating strong earnings power growth.
MS
  • ★Gross margin of 87.1% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
  • ★Each dollar of retained earnings has created $6.65 of market value — management is an exceptional capital allocator.
  • ★PEG ratio of 0.75 suggests the stock is undervalued relative to its growth rate — paying less than 1x for each unit of earnings growth.

Risks

AOS
    MS
    • ⚠High leverage (4.56x debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
    • ⚠Altman Z-Score of 0.29 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
    • ⚠7 insider sales totaling $25.2M with no purchases in the past 3 months — insiders are reducing their exposure.

    Key Valuation Metrics

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    AOS
    MS
    Valuation
    $426.16M
    Free Cash Flow
    N/A
    4.77%
    FCF Yield
    N/A
    16.76
    Trailing P/E
    15.53
    14.86
    Forward P/E
    12.89
    Quality & Moat
    26.34%
    ROIC
    3.43%
    29.40%
    ROE
    14.42%
    38.83%
    Gross Margin
    87.06%
    0.88
    PEG Ratio
    0.75
    Balance Sheet Safety
    0.11
    Debt / Equity
    4.56
    N/A
    Interest Coverage
    N/A
    0.01
    Net Debt / EBITDA
    N/A
    2.17%
    Dividend Yield
    2.52%
    AOS: 3Ties: 1MS: 5
    AOSMS

    Historical Fundamentals

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    AOS

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation.

    MS

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation.

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation.

    $1 Retained Earnings Test

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    AOS
    $0.57
    created per $1 retained over 3 years
    Mediocre Allocator
    Σ Retained
    $1.07B
    Δ Market Cap
    +$612.2M
    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
    MS
    $6.65
    created per $1 retained over 3 years
    Exceptional Value Creator
    Σ Retained
    $20.84B
    Δ Market Cap
    +$138.59B
    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

    Discounted Cash Flow (DCF) Analysis

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    AOS
    26.3% Margin of Safety
    Price is 26.3% below estimated fair value
    Current Price: $64.54
    Fair Value: $87.59
    Strongly undervalued
    Undervalued
    Fairly valued
    Overvalued
    Strongly overvalued
    MS
    45.5% Margin of Safety
    Price is 45.5% below estimated fair value
    Current Price: $158.55
    Fair Value: $290.92
    Strongly undervalued
    Undervalued
    Fairly valued
    Overvalued
    Strongly overvalued

    Reverse DCF — Market-Implied Growth

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    AOS

    What growth rate is the market pricing in at $65?

    +5.0%
    Market-Implied Owner Earnings Growth
    Standard FCF implies +8.4%

    The market implies +5.0% Owner Earnings growth, below historical trends — potential opportunity.

    Standard FCF implies a more demanding +8.4%, reflecting heavy growth investment expected to generate future returns.

    MS

    Requires positive FCF to compute implied growth rate.

    Economic Moat Score

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    AOS
    95/100
    Wide Moat
    70+ Wide · 40-69 Narrow · <40 None

    Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.

    Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.
    MS
    32/100
    No Moat
    70+ Wide · 40-69 Narrow · <40 None

    No durable moat detected, though revenue predictability shows some competitive positioning. The business lacks consistent evidence of sustainable advantages.

    Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.

    Forensic Accounting

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    AOS
    -2.50
    Unlikely Manipulator
    Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

    M-Score Trend

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
    MS
    -2.09
    Possible Manipulator
    Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

    M-Score Trend

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

    Ownership Breakdown

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    AOS
    Insiders 0.4%Institutions 108.0%
    No. of Institutional Holders903
    High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.
    MS
    Insiders 24.0%Institutions 62.7%Retail & Other 13.3%
    No. of Institutional Holders3,182
    High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.

    High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.

    Insider Buying Activity

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    AOS
    0
    Buys (3M)
    0
    Buys (12M)
    No open market insider purchases found.
    Open market purchases · includes direct & indirect ownership · excludes option exercises
    MS
    0
    Buys (3M)
    1
    Buys (12M)
    Total value (12M): $5,630
    PETERSON DOUGLAS L
    Director
    $5,630
    @ $156.39 · 2025-10-17
    Open market purchases · includes direct & indirect ownership · excludes option exercises

    Open market purchases · includes direct & indirect ownership · excludes option exercises.

    Insider Selling Activity

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    AOS
    2
    Sells (3M)
    5
    Sells (12M)
    Total value (12M): $3.11M
    SCHUH DARRELL W
    Officer
    $82,126
    @ $74.39 · 2026-03-04
    SCHUH DARRELL W
    Officer
    $28,439
    @ $79.88 · 2026-02-13
    STERN JAMES F
    General Counsel
    $1.24M
    @ $71.24 · 2025-08-07
    WHEELER KEVIN J.
    Officer and Director
    $1.58M
    @ $71.26 · 2025-07-30
    SMITH MARK D
    Director
    $171,264
    @ $71.36 · 2025-07-29
    HEIDEMAN ROBERT JAMES
    Chief Technology Officer
    $67,357
    @ $65.65 · 2025-02-07
    KARGE DOUGLAS SAMUEL
    Officer
    $27,507
    @ $65.65 · 2025-02-07
    CARVER SAMUEL M
    Officer
    $1.19M
    @ $81.00 · 2024-08-07
    BROWN RONALD DALE
    Director
    $311,071
    @ $85.67 · 2024-07-30
    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives
    MS
    7
    Sells (3M)
    16
    Sells (12M)
    Total value (12M): $62.45M
    SIMKOWITZ DANIEL A
    President
    $6.02M
    @ $182.61 · 2026-01-30
    GROSSMAN ERIC F
    Officer
    $3.97M
    @ $184.00 · 2026-01-20
    CRAWLEY MANDELL L.
    Officer
    $1.44M
    @ $183.45 · 2026-01-20
    YESHAYA SHARON
    Chief Financial Officer
    $2.94M
    @ $185.77 · 2026-01-20
    SMITH CHARLES AUBREY III
    Officer
    $1.55M
    @ $182.08 · 2026-01-20
    PIZZI MICHAEL A
    Officer
    $3.69M
    @ $184.55 · 2026-01-20
    SAPERSTEIN ANDREW MICHAEL
    President
    $5.57M
    @ $183.62 · 2026-01-20
    PICK EDWARD N.
    Chief Executive Officer
    $16.43M
    @ $164.34 · 2025-10-31
    GROSSMAN ERIC F
    Officer
    $1.69M
    @ $141.12 · 2025-07-17
    SIMKOWITZ DANIEL A
    President
    $4.09M
    @ $141.13 · 2025-07-17
    SMITH CHARLES AUBREY III
    Officer
    $2.81M
    @ $140.30 · 2025-07-17
    PIZZI MICHAEL A
    Officer
    $2.53M
    @ $140.62 · 2025-07-17
    SIMKOWITZ DANIEL A
    President
    $3.70M
    @ $127.37 · 2025-05-12
    HERZ ROBERT H
    Director
    $95,459
    @ $119.32 · 2025-05-02
    SAPERSTEIN ANDREW MICHAEL
    President
    $4.80M
    @ $120.00 · 2025-05-02
    GROSSMAN ERIC F
    Officer
    $1.12M
    @ $111.65 · 2025-04-15
    CRAWLEY MANDELL L.
    Officer
    $1.15M
    @ $138.06 · 2025-01-22
    GROSSMAN ERIC F
    Officer
    $1.78M
    @ $136.20 · 2025-01-21
    SIMKOWITZ DANIEL A
    President
    $5.00M
    @ $136.61 · 2025-01-21
    AKRAM RAJA
    Chief Financial Officer
    $2.38M
    @ $136.01 · 2025-01-21
    PIZZI MICHAEL A
    Officer
    $2.52M
    @ $136.92 · 2025-01-21
    SAPERSTEIN ANDREW MICHAEL
    President
    $4.20M
    @ $136.43 · 2025-01-21
    CRAWLEY MANDELL L.
    Officer
    $368,375
    @ $105.25 · 2024-07-26
    AKRAM RAJA
    Officer
    $797,764
    @ $106.37 · 2024-07-18
    SIMKOWITZ DANIEL A
    President
    $4.26M
    @ $106.54 · 2024-07-17
    HERZ ROBERT H
    Director
    $106,621
    @ $106.62 · 2024-07-17
    CRAWLEY MANDELL L.
    Officer
    $692,663
    @ $99.61 · 2024-05-14
    GORMAN JAMES P
    Officer and Director
    $9.02M
    @ $90.21 · 2024-04-18
    SMITH CHARLES AUBREY III
    Officer
    $1.01M
    @ $90.09 · 2024-04-17
    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.

    🎭 Mr. Market's Mood

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    AOS
    FearGreed
    😨Fear(36/100)

    "Market is pessimistic — investigate whether fears are temporary or structural"

    Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
    MS
    FearGreed
    😐Neutral(48/100)

    "Market is pricing this stock without strong emotion in either direction"

    Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

    Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

    ⚖️ Buffett Signal

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    AOS
    ⚪Awaiting DCF Data

    The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

    DCF Margin of Safety: N/AMr. Market's Mood: Fear (36)
    MS
    ⚪Awaiting DCF Data

    The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

    DCF Margin of Safety: N/AMr. Market's Mood: Neutral (48)
    View AOS Full AnalysisView MS Full Analysis