Using the PEG framework with analyst consensus forward EPS growth of 8.9% plus 2.1% dividend yield, A. O. Smith Corporation has a fair value of $35.70 based on NTM EPS (FY2026) of $4.01. The current PEG ratio is 1.84.
PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.
PEG tends to undervalue slow growers — consider dividend yield and asset value instead.
| EPS Growth RateForward | 6.8% |
| Dividend Yield | +2.1% |
| Adjusted Growth (clamped 8–25%) | 8.9% |
| Fair P/E | 8.9x |
| NTM EPS (FY2026) | $4.01 |
| Fair Value | $35.70 |
| Period | EPS Est. | Growth | Analysts |
|---|---|---|---|
| FY2025 (actual) | $3.86 | — | — |
| FY2026E | $4.01 | +3.9% | 11 |
| FY2027E | $4.31 | +7.5% | 10 |
| FY2028E | $4.56 | +5.7% | 4 |
| FY2029E | $5.02 | +10.1% | 3 |
4Y Forward EPS CAGR: 6.8%
| Year | Net Income | EPS | YoY |
|---|---|---|---|
| FY2021 | $487.1M | $3.02 | — |
| FY2022 | $235.7M | $1.51 | -50.0% |
| FY2023 | $556.6M | $3.69 | +144.4% |
| FY2024 | $533.6M | $3.63 | -1.6% |
| FY2025 | $546.2M | $3.86 | +6.3% |
4Y Historical EPS CAGR: 6.3%
The PEG Fair Value uses the Price/Earnings-to-Growth framework. A stock is fairly valued when its P/E ratio equals its earnings growth rate (PEG = 1.0). This model adds dividend yield to the growth rate per the original PEGY formula.
Growth rate priority: analyst consensus forward EPS CAGR (when ≥ 3 analysts cover the stock), falling back to historical EPS CAGR. Using EPS rather than net income avoids distortion from share buybacks. The growth rate is clamped between 8% and 25% — below 8% would undervalue stable earners, while above 25% would overvalue unsustainable spikes.