A. O. Smith

Management has shown disciplined capital allocation: steady organic reinvestment, bolt‑on acquisitions in water treatment (Aquasana, Hague, Water‑Right, Master Water, Atlantic Filter, Water Tec, Impact) and the 2024 Pureit deal (~120 million purchase price).

Shareholder returns are significant: in H1 2025, the company repurchased 3.79 million shares for 251 million at an average price of ~$66 and guided to ~400 million of repurchases for 2025; it also raised the dividend in October 2025 to $0.36 per quarter, extending a >30‑year increase streak.

We note management’s recent decision to prioritize more profitable water treatment channels and right‑size China, which points to improving capital discipline. Long‑term value creation will hinge on returns from high‑efficiency innovation, execution on DOE‑driven product transitions, and optimizing international exposure.