 Welcome to the channel. This is reliable Rudy today. We're gonna pick up on our A.O. Smith analysis we're going to make a part 2 video and Potentially a part 3 video So we're gonna go into macro trends We're going to try and plug in projections that we feel comfortable with and see where we want to buy the stock and then for the third for the part 3 of AOS we are going to go into the charting and See if our Evaluation our discounted cash flow matches up with the chart where we want to buy and then we will go from there So before I get into this valuation first, I'll say I'm not a licensed financial advisor Everything in this video contains only my opinion as for entertainment purposes only Okay, so getting into this video. We're gonna go over the macro trends. I have not looked at anything yet going to Type in AOS we're gonna start with just revenue That is our first thing that we are focused with here now I can see their year-to-date they have benefited they that is some higher growth compared to their 5 and 10 year average So we're gonna decipher if that is sustainable Okay, so I can see that This is a very large increase in revenue now remember this is the year 2020 to 2021 but now in these last couple quarters. They've pretty much continued this revenue growth So that's very impressive Especially in the hard times that we've had so far in the year 2022 So I yeah, this is very impressive now you can see From the year 2011 to the year 2018 pretty consistent growth all the way through this and then from 2018 to the beginning of 2020 we had a short-term decline But then right back to it and they've been Growing very fast in revenue So yeah before I put these revenue numbers and I'm actually gonna go over to Some of the margins and see if their margins have at absolutely spiked as well Now I can see here's that 2018 fall now their net margins Their net profit margins did not decline by too much Even and even though their revenue declined greatly during those years and they've still stayed pretty consistent right around these double digits so Off first glance I'm already gonna say that you know I can expect 10 To 13% net profit margins and I can see they did have a a nice spike in operating So becoming more profitable, but now they've kind of flattened out right here Are they going to be able to hold this or is it going to and I can see even prior to the year 2018? They were consistently right around this 17% So that's very interesting That they've been able to keep this up, especially Going forward in the 2022 Lastly I'm going to look at the PE of the company now I can see here is their big spike of the revenue and earnings that they've been having the last couple years now I can see their PE is pretty much consistently been right around this range right here Okay, so very very interesting stuff right here the question that you're gonna have to ask yourself Is this sustainable right here now? You could have been saying back here is this sustainable and you could have said no But they they continued this revenue growth for seven years So pretty damn impressive right there But you know, I still wouldn't be surprised if this revenue started flattening out too much So I can see down here at the bottom 10 20 29 28 19 27 and now only 12 So first before I go and unplug these numbers and my job is to be conservative here I'm not going to use double digit growth going forward, but I am going to use revenue growth I'm not expecting it to flatten out so For our tenure analysis I said my job is to be conservative and this is what I'm plugging in for annual numbers. I'm going to use four six and eight feel very confident and in plugging those numbers in and I do not have a crystal ball for all I know they could Grow the revenue faster in this for all I know it could be declining revenue going forward I do not know but my job is be conservative and I feel good with these numbers So next like I mentioned with the profit margins, we can go back real quick and look at that price ratios Nope margins I can see they've been consistent over the last four or five years They've been consistent right around this no huge spike like right here look They had a huge spike and then reverted right back down to their mean and then they had this Consistent growth and net income and now they've been just right around this ballpark range So I feel very good plugging in numbers around that You know we'll go 10 and a half 12 and 13 and a half 13 and a half I feel really good putting those numbers in now actually this is like I said be my job is be conservative I wouldn't be surprised if they were able to if they're able to continue growing their revenue like this I wouldn't be surprised these profit margins actually were a little bit higher But for free cash will margin we're going to use these same numbers 13.5 now PE now I'm matching up this PE with their growth I'm not as focused with their average PE right in right in around here And I can see they've consistently been around these 20s I am not going to plug in 20s into my model because my job is be conservative and Real quick we'll go back over to the revenue now the revenue that they've posted Over their last one two three four five six seven quarters has been pretty much a double-digit growth now I'm calculating in single-digit growth now This isn't going into the earnings and looking at forward statements either so I could do that and Put that into a model, but I'm trying to get a ballpark range right here that will potentially be in a part 3 video So looking at this I can understand Why the price of earnings is up here because for this growth down here? I'm willing to pay that that 20s PE for a company But I'm not calculating that double-digit growth going forward. So I'm actually going to be Probably down in these higher teens mid teens range for this growth. So I'm actually going to go I Will go 12 14 16 now I that is being very conservative. I'm only I'm just trying to show good examples of being conservative And I know that's underneath their five-year average if I go back to their metrics are five-year average is 24 So I could be a little bit more Generous I could go 14 16 18 if I'm willing to pay a premium for this company But I still feel like that's a little bit on the higher side So for this example, I'm actually going to stay a little bit more conservative price and a little bit more margin of safety because I'm trying to preach being conservative and Then we want our 15% return now We want that 15% return because if I'm not confident I'm gonna get a 15% return in an individual company I'm just gonna buy VT or VX us a broadly diversified index fund and I'm not even gonna worry about it I don't have to worry about Okay, they over the next five years are revenue decline. I don't have to worry about that because I'm buying the world's economy So we have our numbers plugged in so let's analyze and see where we're sitting. Okay, so If I believe these high assumptions, I'm really interested in the stock around 50 bucks and Middle assumptions 36 bucks low assumptions 25 bucks now with this company in particular I'm actually going to plug in a little bit higher numbers for a second Model real quick and I'm going to use 12 13 and 14 12 13 14 Now for this a little bit higher bit of revenue. I'm going to pay a higher PE Okay, so I have a little bit higher PE So, okay, I can see if I believe these high numbers that they can put up double-digit growth I'm actually starting to get very interested in the stock Yeah, pretty good stuff right here. I've been pretty impressed with aosmith since I started my analysis on this Now I will say I do not have an individual holding in this company. I may own it and my VT index I don't know But yeah, this not not a bad first start to this new evaluation in aosmith This is going to wrap up the video. I'm going to add this to in my watch list in This everything money, so I'm going to hit that add button now this is going to notify me if aosmith ever gets down to this price range and That will be potentially where I do further analysis into the company But for right now, we're going to have that $48 right into our watch list And this is going to wrap up the video. I am going to make a part 3 on the video going through the charting and Yeah, hopefully that video is out shortly after I post this video But it will definitely be out later today. Hope you guys like the video and I'll see you on the next one