Smart Money Move: Ilham Kadri Grabs $150K Worth Of A.O. Smith Stock

A notable insider purchase on April 9, was reported by Ilham Kadri, Director at A.O. Smith AOS, based on the most recent SEC filing.

What Happened: In a recent Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday, Kadri increased their investment in A.O. Smith by purchasing 2,468 shares through open-market transactions, signaling confidence in the company’s potential. The total transaction value is $150,005.

A.O. Smith shares are trading up 0.05% at $62.59 at the time of this writing on Thursday morning.

About A.O. Smith

A.O. Smith manufactures a broad lineup of water heaters, boilers, and water treatment products. The company has two reporting segments: North America (75% of sales) and rest of world (25% of sales). A.O. Smith is the leading manufacturer of water heaters in North America for the residential and commercial markets, with approximately 37% and 54% market share, respectively. Residential water heaters account for Most of North American sales and are distributed equally through wholesale and retail channels. Most of A.O. Smith’s international revenue is from China, a market the company entered during the mid-1990s.

Understanding the Numbers: A.O. Smith’s Finances

Revenue Growth: A.O. Smith’s revenue growth over a period of 3 months has faced challenges. As of 31 December, 2024, the company experienced a revenue decline of approximately -7.66%. This indicates a decrease in the company’s top-line earnings. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Industrials sector.

Analyzing Profitability Metrics:

• Gross Margin: The company excels with a remarkable gross margin of 37.06%, indicating superior cost efficiency and profitability compared to its industry peers.

• Earnings per Share (EPS): A.O. Smith’s EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 0.752617.

Debt Management: With a below-average debt-to-equity ratio of 0.12, A.O. Smith adopts a prudent financial strategy, indicating a balanced approach to debt management.

Financial Valuation:

• Price to Earnings (P/E) Ratio: With a lower-than-average P/E ratio of 17.23, the stock indicates an attractive valuation, potentially presenting a buying opportunity.

• Price to Sales (P/S) Ratio: The Price to Sales ratio is 2.41, which is lower than the industry average. This suggests a possible undervaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With a below-average EV/EBITDA ratio of 11.34, A.O. Smith presents an opportunity for value investors. This lower valuation may attract investors seeking undervalued opportunities.

Market Capitalization: Indicating a reduced size compared to industry averages, the company’s market capitalization poses unique challenges.

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Why Insider Activity Matters in Finance

Insider transactions shouldn’t be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

In the context of legal matters, the term “insider” refers to any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities, as outlined by Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are obligated to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

Pointing towards optimism, a company insider’s new purchase signals their positive anticipation for the stock to rise.

Despite insider sells not always signaling a bearish sentiment, they can be driven by various factors.

Important Transaction Codes

For investors, a primary focus lies on transactions occurring in the open market, as indicated in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of A.O. Smith’s Insider Trades.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.