Home > Comparison > Industrials > IEX vs AOS
The strategic rivalry between IDEX Corporation and A. O. Smith Corporation shapes the industrial machinery sector’s evolution. IDEX excels as a diversified solutions provider with fluidics and safety products, while A. O. Smith focuses on residential and commercial water heating systems. This analysis pits IDEX’s innovation-driven model against A. O. Smith’s market penetration and scale. I aim to identify which company offers a superior risk-adjusted return for a balanced industrial portfolio.
Table of contents
Companies Overview
IDEX Corporation and A. O. Smith Corporation are key players in the industrial machinery sector, shaping essential markets worldwide.
IDEX Corporation: Applied Solutions Leader
IDEX dominates industrial machinery with diverse fluid and metering technologies that generate revenue across three segments. Its core business includes precision pumps, flow meters, and safety equipment serving food, chemical, and life sciences industries. In 2026, IDEX focuses strategically on innovation in fluidics and expanding its health and safety product lines globally.
A. O. Smith Corporation: Water Heating Specialist
A. O. Smith specializes in residential and commercial water heating and treatment solutions across North America, China, and Europe. Its revenue stems from boilers, water heaters, and filtration products marketed under multiple brands. The company prioritizes expanding e-commerce channels and enhancing product efficiency to capture rising demand for sustainable water solutions in 2026.
Strategic Collision: Similarities & Divergences
Both companies operate in industrial machinery with a focus on engineered products, but IDEX embraces a broad applied technology portfolio while A. O. Smith concentrates on water heating systems. Their primary battleground lies in industrial and commercial equipment markets, yet IDEX’s innovation-driven approach contrasts with A. O. Smith’s brand and distribution strength. These differences define their unique investment profiles and risk exposures.
Income Statement Comparison
This table dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | IDEX Corporation (IEX) | A. O. Smith Corporation (AOS) |
|---|---|---|
| Revenue | 3.46B | 3.83B |
| Cost of Revenue | 1.92B | 2.34B |
| Operating Expenses | 819M | 759M |
| Gross Profit | 1.54B | 1.49B |
| EBITDA | 903M | 792M |
| EBIT | 697M | 729M |
| Interest Expense | 64M | 14M |
| Net Income | 483M | 546M |
| EPS | 6.41 | 3.86 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals each company’s true operational efficiency and profit conversion power over recent years.
IDEX Corporation Analysis
IDEX Corporation’s revenue grew steadily to 3.46B in 2025, posting a net income of 483M. Its gross margin holds strong at 44.5%, while the net margin softened slightly to 14%. Despite a slight dip in net income and EPS in 2025, IDEX maintains robust operating efficiency and margin resilience amid moderate revenue growth.
A. O. Smith Corporation Analysis
A. O. Smith’s revenue rose modestly to 3.83B in 2025, generating a net income of 546M. Its gross margin is respectable at 38.8%, with a net margin slightly higher at 14.3%. The company shows modest revenue growth but improved EPS by 6.3%, signaling steady profit quality with cautious margin expansion.
Margin Control vs. Growth Stability
IDEX delivers a higher gross margin and steady revenue growth, but its net margin and EPS faced headwinds in 2025. A. O. Smith posts a lower gross margin but a slightly better net margin and more consistent EPS growth. For investors, IDEX appeals to those valuing margin strength and scale, while A. O. Smith suits those prioritizing stable earnings momentum.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies analyzed:
| Ratios | IDEX Corporation (IEX) | A. O. Smith Corporation (AOS) |
|---|---|---|
| ROE | 12.0% | 25.6% |
| ROIC | 8.6% | 23.9% |
| P/E | 27.7 | 17.1 |
| P/B | 3.33 | 4.39 |
| Current Ratio | 2.86 | 1.50 |
| Quick Ratio | 2.02 | 0.94 |
| D/E | 0.00017 | 0.0902 |
| Debt-to-Assets | 0.0001 | 0.0611 |
| Interest Coverage | 11.18 | 53.93 |
| Asset Turnover | 0.50 | 1.22 |
| Fixed Asset Turnover | 7.39 | 5.62 |
| Payout ratio | 44.0% | 35.8% |
| Dividend yield | 1.59% | 2.09% |
| Fiscal Year | 2025 | 2025 |
Efficiency & Valuation Duel: The Vital Signs
Ratios serve as a company’s DNA, uncovering operational strengths and hidden financial risks that shape investor decisions.
IDEX Corporation
IDEX shows moderate profitability with a 12.0% ROE and a net margin near 14%, signaling stable operations. The stock trades at a stretched P/E of 27.7 and a high P/B of 3.33, indicating an expensive valuation. Shareholders receive a modest 1.59% dividend yield, reflecting a balanced return approach with steady reinvestment in core assets.
A. O. Smith Corporation
A. O. Smith delivers strong profitability with a 25.6% ROE and a 14.3% net margin, highlighting operational efficiency. Its P/E of 17.1 marks a fair valuation, while a P/B of 4.39 remains elevated. The company supports shareholders with a 2.09% dividend yield, backed by robust free cash flow and disciplined capital allocation.
Premium Valuation vs. Operational Safety
A. O. Smith offers superior profitability and a more attractive P/E ratio, balancing growth and shareholder returns. IDEX, while stable, trades at a premium with less impressive returns. Investors seeking operational strength and value may prefer A. O. Smith’s profile; risk-averse investors might lean toward IDEX’s steadiness.
Which one offers the Superior Shareholder Reward?
Between IDEX Corporation (IEX) and A. O. Smith Corporation (AOS), IEX offers a more balanced shareholder reward in 2026. IEX delivers a 1.59% dividend yield with a sustainable 44% payout ratio and strong free cash flow coverage near 91%. Its consistent dividend growth complements aggressive buybacks, fueling total returns. AOS pays a higher 2.09% yield but with a riskier 36% payout ratio and weaker free cash flow coverage around 88%. AOS’s buyback pace is modest, relying more on dividends. IEX’s distribution mix aligns better with long-term value creation, making it my preferred total return pick this year.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental financial DNA and strategic trade-offs of IDEX Corporation and A. O. Smith Corporation:
I observe that IDEX boasts a stronger balance sheet with a top debt-to-equity score of 5, signaling low leverage risk. A. O. Smith leads in profitability metrics, scoring 5 in both ROE and ROA, indicating superior asset and equity efficiency. However, IDEX’s discounted cash flow score of 4 surpasses A. O. Smith’s moderate 3, suggesting better cash flow valuation. Both share moderate valuation scores, exposing potential pricing caution. Overall, IDEX presents a more balanced risk profile, while A. O. Smith relies on operational efficiency as its main edge.
Bankruptcy Risk: Solvency Showdown
I note both firms are firmly in the safe zone, but A. O. Smith’s Altman Z-Score of 8.3 notably exceeds IDEX’s 5.2, underscoring stronger long-term solvency and lower bankruptcy risk in this economic cycle:
Financial Health: Quality of Operations
IDEX scores an impressive 8 on the Piotroski F-Score, signaling very strong financial health. A. O. Smith’s score of 7 is strong but slightly less robust, indicating IDEX has the edge in operational quality and balance sheet strength:
How are the two companies positioned?
This section dissects the operational DNA of IDEX and A. O. Smith by comparing their revenue distribution and internal dynamics. The goal is to confront their economic moats and identify which model offers the most resilient competitive advantage today.
Revenue Segmentation: The Strategic Mix
This visual comparison dissects how IDEX Corporation and A. O. Smith Corporation diversify their income streams and where their primary sector bets lie:
IDEX Corporation showcases a balanced revenue mix across Health And Science Technologies (1.3B), Fluid And Metering Technologies (1.2B), and Fire And Safety Diversified Products (744M) in 2024. This diversification reduces concentration risk and anchors its ecosystem lock-in. In contrast, A. O. Smith lacks available revenue segmentation data, leaving its strategic revenue concentration unclear. IDEX’s approach signals infrastructure dominance through multiple robust segments.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of IDEX Corporation (IEX) and A. O. Smith Corporation (AOS):
IEX Strengths
- Diversified revenue across three segments
- Favorable current and quick ratios indicate strong liquidity
- Zero debt and minimal debt-to-assets ratio enhance financial stability
- Favorable fixed asset turnover shows efficient asset use
AOS Strengths
- Higher profitability with favorable net margin, ROE, and ROIC
- Strong global presence with large North America and Rest of World segments
- Favorable interest coverage and asset turnover ratios support operational efficiency
- Higher dividend yield reflects shareholder returns focus
IEX Weaknesses
- Unfavorable P/E and P/B ratios suggest valuation concerns
- Asset turnover is weak, indicating lower sales efficiency
- ROIC slightly below WACC hints at marginal capital returns
AOS Weaknesses
- Higher WACC raises cost of capital concerns
- Unfavorable price-to-book ratio may affect valuation appeal
- Current and quick ratios are neutral, indicating moderate liquidity
Both companies show strong points in profitability and global reach. IEX’s conservative debt profile contrasts with AOS’s higher capital costs. These differences shape their respective financial strategies and risk profiles.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only shield protecting long-term profits from relentless competition erosion in capital-intensive industries:
IDEX Corporation: Diversified Engineering with Shrinking Value Creation
IDEX’s moat lies in its diversified industrial portfolio, but declining ROIC below WACC signals value destruction. Margin stability is good, yet profitability erodes, threatening the moat in 2026.
A. O. Smith Corporation: Water Heating Specialist with Expanding Economic Moat
A. O. Smith’s moat stems from brand strength and efficient capital use, shown by ROIC well above WACC and rising profitability. Its focus on innovation and global growth deepens its moat steadily.
Value Creation vs. Value Destruction: Capital Efficiency at War
A. O. Smith holds the deeper, more durable moat with consistent value creation and rising returns. IDEX’s shrinking profitability leaves it vulnerable to competitive pressures and market share loss.
Which stock offers better returns?
The past year shows notable price declines for both stocks, with recent strong rebounds indicating accelerating bullish momentum in late 2025 and early 2026.
Trend Comparison
IDEX Corporation’s stock declined by 11.55% over the past year, showing a bearish trend with accelerating price movements and a high volatility level of 22.68%. The recent three-month rebound gained 24.38%.
A. O. Smith Corporation’s stock fell 10.01%, also bearish with accelerating momentum but lower volatility at 7.79%. The recent rally added 20.38% over the last quarter.
Both stocks underperformed annually but reversed course recently. IDEX delivered the highest market performance in the recent period with a stronger rebound and higher buyer dominance.
Target Prices
Analysts present a clear consensus on target prices for IDEX Corporation and A. O. Smith Corporation.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| IDEX Corporation | 210 | 220 | 213.67 |
| A. O. Smith Corporation | 75 | 85 | 78 |
The target consensus for IDEX slightly exceeds its current price of 212.25, signaling modest upside potential. A. O. Smith’s consensus aligns closely with its 78.37 share price, indicating a balanced market view.
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How do institutions grade them?
The following tables summarize recent institutional grades for IDEX Corporation and A. O. Smith Corporation:
IDEX Corporation Grades
This table presents recent grades from reputable financial institutions for IDEX Corporation.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Stifel | Maintain | Buy | 2026-01-23 |
| Citigroup | Maintain | Buy | 2025-12-08 |
| RBC Capital | Maintain | Outperform | 2025-10-30 |
| Stifel | Maintain | Buy | 2025-10-20 |
| Oppenheimer | Maintain | Outperform | 2025-10-07 |
| DA Davidson | Maintain | Neutral | 2025-08-04 |
| Stifel | Maintain | Buy | 2025-07-31 |
| RBC Capital | Maintain | Outperform | 2025-07-31 |
| Oppenheimer | Maintain | Outperform | 2025-07-31 |
| Stifel | Maintain | Buy | 2025-07-21 |
A. O. Smith Corporation Grades
This table presents recent grades from reputable financial institutions for A. O. Smith Corporation.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| DA Davidson | Maintain | Neutral | 2026-02-02 |
| Citigroup | Maintain | Neutral | 2026-01-30 |
| Stifel | Maintain | Buy | 2026-01-30 |
| DA Davidson | Maintain | Neutral | 2025-11-13 |
| Citigroup | Maintain | Neutral | 2025-10-29 |
| Stifel | Maintain | Buy | 2025-10-29 |
| Oppenheimer | Maintain | Outperform | 2025-07-28 |
| UBS | Maintain | Neutral | 2025-07-28 |
| Baird | Maintain | Neutral | 2025-07-25 |
| Stifel | Maintain | Buy | 2025-07-25 |
Which company has the best grades?
IDEX Corporation consistently earns Buy and Outperform grades from multiple firms. A. O. Smith shows more Neutral ratings, with fewer Buy and Outperform calls. This divergence may influence investor sentiment and portfolio positioning.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
IDEX Corporation
- Operates in diverse industrial machinery niches, facing moderate competition in fluid handling and safety segments.
A. O. Smith Corporation
- Competes globally in water heating and treatment, exposed to intense competition and regional market volatility.
2. Capital Structure & Debt
IDEX Corporation
- Virtually no debt with a debt-to-assets ratio of 1%, signaling low financial risk and strong balance sheet.
A. O. Smith Corporation
- Maintains low but present leverage (D/E 0.09), with solid interest coverage, indicating prudent but higher leverage exposure.
3. Stock Volatility
IDEX Corporation
- Beta near 1.0 (0.99) suggests stock moves in line with the market, implying moderate volatility.
A. O. Smith Corporation
- Higher beta at 1.34 indicates greater sensitivity to market swings and increased stock price volatility.
4. Regulatory & Legal
IDEX Corporation
- Industrial sector exposure to environmental and safety regulations; no significant legal issues reported.
A. O. Smith Corporation
- Operates in heavily regulated water treatment markets globally, with ongoing compliance complexity and potential legal risks.
5. Supply Chain & Operations
IDEX Corporation
- Diverse supplier base reduces risk; however, asset turnover below industry average (0.5) hints at operational inefficiencies.
A. O. Smith Corporation
- Higher asset turnover (1.22) reflects operational efficiency but global supply chain complexity adds risk exposure.
6. ESG & Climate Transition
IDEX Corporation
- Exposure to environmental standards in fluid and safety products; moderate ESG risks due to industrial footprint.
A. O. Smith Corporation
- Stronger ESG focus with water conservation and energy-efficient products, aligning with climate transition trends.
7. Geopolitical Exposure
IDEX Corporation
- Primarily US-based with some international sales; geopolitical risk is moderate and geographically limited.
A. O. Smith Corporation
- Global presence in China, Europe, India increases exposure to geopolitical tensions and trade policy risks.
Which company shows a better risk-adjusted profile?
IDEX Corporation’s minimal debt and moderate volatility offer a solid defensive position. A. O. Smith’s higher operational efficiency and ESG alignment are strengths but come with elevated market and geopolitical risks. IEX’s conservative capital structure reduces financial vulnerability, while AOS’s global footprint introduces complexity. Overall, IEX presents a more balanced risk-adjusted profile. The standout risk is AOS’s heightened geopolitical exposure amid market volatility, contrasted with IEX’s operational inefficiency signaled by low asset turnover.
Final Verdict: Which stock to choose?
IDEX Corporation’s superpower lies in its robust balance sheet and operational resilience. Its favorable liquidity and low leverage underscore financial discipline. However, its declining ROIC signals a need for vigilance on value creation. I see it fitting an Aggressive Growth portfolio that can tolerate some operational headwinds.
A. O. Smith Corporation boasts a strong economic moat with a growing ROIC well above its cost of capital. Its efficient asset use and superior profitability offer a strategic edge. Compared to IDEX, it presents a safer profile with more consistent value creation, suiting a GARP – Growth at a Reasonable Price investor.
If you prioritize long-term value creation and stability, A. O. Smith outshines with its sustainable competitive advantage and improving profitability. However, if you seek exposure to an aggressive growth story with solid liquidity buffers, IDEX could be compelling despite its current challenges. Both require careful monitoring of evolving fundamentals.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of IDEX Corporation and A. O. Smith Corporation to enhance your investment decisions:
