Leadership In China Driving A Bright Future At A.O. Smith

A.O. Smith (AOS) doesn't try to do everything, but focusing on doing what it does with a high degree of operating excellence has produced great results for shareholders - the market returns over the past five and 10 years have been well ahead of the norms for other appliance companies like Whirlpool (WHR) or Electrolux (OTCPK:ELUXY), while revenue growth, margin leverage, and returns on capital stack up very favorably as well.

That's great and all, but that's in the past right?

I expect that A.O. Smith's North American business will remain a mid-single-digit grower with very healthy margins, while exceptional growth from the company's efforts in China (and, further down the road, India) should keep overall revenue growth in the high single digits for quite some time to come. A.O. Smith's excellence is well-represented in the share price, though, and it's tough to see how this is a bargain unless you have very bold expectations for future revenue growth and margin leverage.

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Leadership In China Driving A Bright Future At A.O. Smith