Home > Comparison > Industrials > IR vs AOS
The strategic rivalry between Ingersoll Rand Inc. and A. O. Smith Corporation shapes the industrial machinery landscape. Ingersoll Rand operates as a diversified industrial technologies provider with a global footprint. In contrast, A. O. Smith focuses on water heating and treatment solutions, blending manufacturing with consumer-facing distribution. This analysis pits broad industrial innovation against specialized product leadership to reveal which company delivers superior risk-adjusted returns for a diversified portfolio in 2026.
Table of contents
Companies Overview
Two industrial machinery leaders, Ingersoll Rand Inc. and A. O. Smith Corporation, anchor critical infrastructure markets globally.
Ingersoll Rand Inc.: Diverse Industrial Technologies Powerhouse
Ingersoll Rand dominates the industrial machinery sector with its broad portfolio of air, fluid, energy, and specialty vehicle technologies. It generates revenue through manufacturing and servicing air compressors, fluid transfer systems, and precision pumps. In 2026, it strategically intensified focus on innovation across Industrial Technologies and Precision Science segments to deepen its presence in mission-critical applications worldwide.
A. O. Smith Corporation: Water Heating and Treatment Specialist
A. O. Smith commands the residential and commercial water heating market with its comprehensive product mix of water heaters, boilers, and treatment systems. Its core revenue stems from sales in North America, China, Europe, and India through wholesale and e-commerce channels. The company’s 2026 strategy centers on expanding its global footprint and enhancing energy-efficient solutions to meet rising environmental standards.
Strategic Collision: Similarities & Divergences
Both firms excel in industrial machinery but diverge sharply in their business focus: Ingersoll Rand emphasizes a multi-industry, technology-driven approach, while A. O. Smith specializes in water heating and treatment. They compete indirectly on global industrial infrastructure upgrades. Investors face distinct profiles—Ingersoll Rand offers diversified exposure with innovation-led growth, whereas A. O. Smith provides concentrated market leadership with steady demand dynamics.
Income Statement Comparison
This table dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Ingersoll Rand Inc. (IR) | A. O. Smith Corporation (AOS) |
|---|---|---|
| Revenue | 7.65B | 3.83B |
| Cost of Revenue | 4.70B | 2.34B |
| Operating Expenses | 1.53B | 0.76B |
| Gross Profit | 2.95B | 1.49B |
| EBITDA | 1.92B | 0.79B |
| EBIT | 1.42B | 0.73B |
| Interest Expense | 0.25B | 0.01B |
| Net Income | 0.58B | 0.55B |
| EPS | 1.46 | 3.86 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison exposes how efficiently each company converts revenue into profit, revealing true operational strength.
Ingersoll Rand Inc. Analysis
Ingersoll Rand’s revenue climbed 5.75% to $7.65B in 2025, while net income dropped 30% to $581M, signaling margin pressure. Gross margin remains healthy at 38.5%, but net margin contraction to 7.6% highlights rising costs. Despite momentum in EBIT growth, declining net margin and EPS suggest challenges in sustaining profitability.
A. O. Smith Corporation Analysis
A. O. Smith posted flat revenue near $3.83B in 2025, with net income rising modestly 2% to $546M. The company sustains a robust gross margin of 38.8% and a superior net margin of 14.3%. EPS growth of 6.3% underscores improving profitability despite minimal top-line expansion, reflecting disciplined cost control.
Margin Resilience vs. Revenue Expansion
Ingersoll Rand demonstrates stronger revenue growth but struggles with margin erosion and net income decline. A. O. Smith delivers steadier profit growth with higher margins despite slower revenue gains. For investors prioritizing margin stability and EPS growth, A. O. Smith’s profile appears more attractive amid current market dynamics.
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 compared:
| Ratios | Ingersoll Rand Inc. (IR) | A. O. Smith Corporation (AOS) |
|---|---|---|
| ROE | 5.76% | 29.40% |
| ROIC | 6.36% | 23.94% |
| P/E | 54.24 | 17.13 |
| P/B | 3.13 | 5.04 |
| Current Ratio | 2.06 | 1.50 |
| Quick Ratio | 1.49 | 0.94 |
| D/E | 0.47 | 0.10 |
| Debt-to-Assets | 26.15% | 6.11% |
| Interest Coverage | 5.58 | 53.93 |
| Asset Turnover | 0.42 | 1.22 |
| Fixed Asset Turnover | 8.22 | 5.62 |
| Payout Ratio | 5.47% | 35.83% |
| Dividend Yield | 0.10% | 2.09% |
| Fiscal Year | 2025 | 2025 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios act as a company’s DNA, uncovering hidden risks and revealing operational prowess essential for investment decisions.
Ingersoll Rand Inc.
Ingersoll Rand shows modest profitability with a 5.76% ROE and a neutral 7.6% net margin. The stock appears expensive, trading at a high 54.24 P/E and stretched 3.13 P/B ratios. Shareholder returns are limited, with a low 0.1% dividend yield, suggesting capital reinvestment over payouts.
A. O. Smith Corporation
A. O. Smith delivers strong profitability, boasting a 29.4% ROE and a robust 14.26% net margin. Valuation metrics are more reasonable at 17.13 P/E but a stretched 5.04 P/B. The company offers attractive 2.09% dividends alongside efficient capital use, balancing growth and shareholder rewards effectively.
Robust Profitability Meets Valuation Discipline
A. O. Smith combines superior profitability with a fairer P/E ratio and solid dividend yield, offering a better risk-reward balance. Ingersoll Rand’s expensive valuation and weak returns suit investors prioritizing reinvestment strategies over immediate income.
Which one offers the Superior Shareholder Reward?
I observe that A. O. Smith Corporation (AOS) delivers a far more attractive shareholder reward than Ingersoll Rand Inc. (IR) in 2026. AOS pays a robust dividend yield near 2.1%, supported by a sustainable payout ratio around 36%. IR’s yield is negligible at 0.1%, with an ultra-low payout ratio under 6%. Both companies return cash via buybacks, but AOS’s consistent free cash flow (FCF) coverage and high dividend payout signal stronger income for investors. IR’s minimal dividend and modest buybacks suggest a return strategy weighted on reinvestment rather than yield. Given AOS’s superior yield, reasonable payout, and buyback intensity, I conclude it offers the superior total return profile in today’s market.
Comparative Score Analysis: The Strategic Profile
The radar chart below reveals the fundamental DNA and trade-offs shaping Ingersoll Rand Inc. and A. O. Smith Corporation’s financial profiles:
A. O. Smith leads with superior ROE (5 vs. 2) and ROA (5 vs. 3), reflecting stronger profit generation and asset efficiency. Its debt-to-equity score (4 vs. 2) signals better financial stability. Ingersoll Rand shows moderate DCF parity (3 each) but lags in valuation metrics (PE 1 vs. 3; PB 2 vs. 1). A. O. Smith offers a more balanced and robust profile, while Ingersoll Rand relies on selective strengths amid valuation concerns.
Bankruptcy Risk: Solvency Showdown
A. O. Smith’s Altman Z-Score of 9.24 vastly outpaces Ingersoll Rand’s 3.93, underscoring a safer solvency position amid current market pressures:
Financial Health: Quality of Operations
A. O. Smith’s Piotroski F-Score of 7 signals stronger operational health than Ingersoll Rand’s 6, indicating fewer internal financial red flags and better value potential:
How are the two companies positioned?
This section dissects IR and AOS’s operational DNA by comparing revenue distribution and internal dynamics, including strengths and weaknesses. The goal is to confront their economic moats and reveal which model offers the most sustainable competitive advantage today.
Revenue Segmentation: The Strategic Mix
The following comparison dissects how Ingersoll Rand Inc. and A. O. Smith Corporation diversify income streams and where their primary sector bets lie:
Ingersoll Rand leans heavily on its Industrial Technologies and Services segment, generating $5.8B in 2024, while its Precision and Science Technologies segment contributes $1.4B. This mix shows moderate diversification with a clear industrial focus. A. O. Smith, however, reports only one revenue segment at $3.8B, indicating reliance on a single core business. Ingersoll Rand’s approach reduces concentration risk and signals infrastructure dominance, unlike A. O. Smith’s concentrated exposure.
Strengths and Weaknesses Comparison
This table compares the strengths and weaknesses of Ingersoll Rand Inc. and A. O. Smith Corporation:
Ingersoll Rand Inc. Strengths
- Diversified revenue from Industrial and Precision segments
- Favorable liquidity ratios with current ratio at 2.06
- Low debt-to-assets at 26.15% supports financial stability
- Favorable interest coverage at 5.58 times
- Solid global presence across Americas, EMEA, Asia Pacific
A. O. Smith Corporation Strengths
- Strong profitability with net margin at 14.26%
- High ROE at 29.4% and ROIC at 23.94% indicate efficient capital use
- Low debt-to-assets at 6.11% and strong interest coverage at 54.03 times
- Global revenue balanced between North America and Rest of World
- Favorable asset turnover at 1.22 supports operational efficiency
Ingersoll Rand Inc. Weaknesses
- Unfavorable ROE at 5.76%, below cost of capital
- High P/E ratio at 54.24 signals potential overvaluation
- Lower asset turnover at 0.42 limits efficiency
- Low dividend yield at 0.1% may deter income investors
- Moderate global footprint with less geographic revenue detail
A. O. Smith Corporation Weaknesses
- Higher P/B ratio at 5.04 may indicate valuation concerns
- Neutral liquidity ratios with quick ratio below 1
- Less diversified revenue with single reportable segment
- Moderate P/E ratio at 17.13 limits growth valuation upside
Ingersoll Rand shows solid liquidity and global diversification but struggles with return metrics and valuation. A. O. Smith excels in profitability and capital efficiency but faces valuation and liquidity neutrality challenges. Both profiles highlight different strategic priorities and financial health areas.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only thing protecting long-term profits from the erosion of competition. Let’s dissect the moats of Ingersoll Rand and A. O. Smith:
Ingersoll Rand Inc.: Expanding Product Ecosystem with Growing ROIC
Ingersoll Rand leverages intangible assets and a broad product portfolio to sustain switching costs. Despite a current ROIC below WACC, its upward ROIC trend signals improving capital efficiency. New markets in precision and science technologies could deepen its moat in 2026.
A. O. Smith Corporation: Value Creation through Operational Excellence
A. O. Smith’s moat centers on cost advantage and brand reputation in water heating. Unlike Ingersoll Rand, it delivers ROIC well above WACC, confirming strong value creation. Its stable EBIT margins and expanding global footprint position it well for market disruption.
ROIC Supremacy vs. Expanding Product Breadth
A. O. Smith boasts a wider moat with ROIC exceeding WACC by 14%, signaling robust competitive advantage. Ingersoll Rand’s moat is narrower but improving. A. O. Smith is better equipped to defend and grow market share amid intensifying competition.
Which stock offers better returns?
Over the past year, Ingersoll Rand Inc. surged 4%, showing accelerating gains, while A. O. Smith Corporation declined nearly 10%, despite recent strong price rebounds.
Trend Comparison
Ingersoll Rand’s stock shows a 4% gain over 12 months with accelerating bullish momentum and a high near 104.17, indicating resilient upward pressure.
A. O. Smith’s stock declined 9.9% over the same period, reflecting a bearish trend despite recent acceleration and a rebound of nearly 22% since November 2025.
Comparing trends, Ingersoll Rand delivered the highest sustained market performance, while A. O. Smith’s overall decline offsets its recent strong recovery.
Target Prices
Analysts present a cautious yet optimistic consensus on these industrial machinery stocks.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Ingersoll Rand Inc. | 87 | 100 | 93 |
| A. O. Smith Corporation | 69 | 85 | 76.2 |
Ingersoll Rand’s target consensus sits slightly below its current price of 98.52, suggesting limited upside. A. O. Smith’s target consensus at 76.2 trails its current 80.46 share price, indicating potential downside pressure.
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How do institutions grade them?
Ingersoll Rand Inc. Grades
The table below summarizes recent grades from reputable institutions for Ingersoll Rand Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Stifel | Maintain | Hold | 2026-01-23 |
| Citigroup | Maintain | Buy | 2026-01-12 |
| Wells Fargo | Maintain | Overweight | 2026-01-07 |
| Stifel | Maintain | Hold | 2025-12-16 |
| Citigroup | Maintain | Buy | 2025-12-08 |
| Citigroup | Maintain | Buy | 2025-11-03 |
| Baird | Maintain | Outperform | 2025-11-03 |
| Stifel | Maintain | Hold | 2025-10-20 |
| Wells Fargo | Maintain | Overweight | 2025-10-06 |
| Morgan Stanley | Maintain | Equal Weight | 2025-08-13 |
A. O. Smith Corporation Grades
Below are the recent grades issued by recognized grading firms for A. O. Smith Corporation:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| DA Davidson | Maintain | Neutral | 2026-02-02 |
| Stifel | Maintain | Buy | 2026-01-30 |
| Citigroup | Maintain | Neutral | 2026-01-30 |
| DA Davidson | Maintain | Neutral | 2025-11-13 |
| Citigroup | Maintain | Neutral | 2025-10-29 |
| Stifel | Maintain | Buy | 2025-10-29 |
| UBS | Maintain | Neutral | 2025-07-28 |
| Oppenheimer | Maintain | Outperform | 2025-07-28 |
| Stifel | Maintain | Buy | 2025-07-25 |
| Baird | Maintain | Neutral | 2025-07-25 |
Which company has the best grades?
Ingersoll Rand Inc. generally receives higher-grade endorsements, including multiple Buy and Outperform ratings. A. O. Smith Corporation shows a mix of Neutral and Buy grades. Investors might view Ingersoll Rand’s stronger consensus as a sign of relatively higher institutional confidence.
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
Ingersoll Rand Inc.
- Faces pressure from industrial machinery peers with moderate net margins and high P/E, signaling overvaluation risk.
A. O. Smith Corporation
- Benefits from strong profitability and ROIC, but operates in highly competitive water heating and treatment markets.
2. Capital Structure & Debt
Ingersoll Rand Inc.
- Maintains a balanced debt-to-equity ratio (0.47) with solid interest coverage (5.58), supporting moderate financial flexibility.
A. O. Smith Corporation
- Exhibits very low debt levels (0.1 D/E) and high interest coverage (54), reflecting a conservative and stable capital structure.
3. Stock Volatility
Ingersoll Rand Inc.
- Beta of 1.31 suggests above-average volatility relative to the market, increasing investor risk exposure.
A. O. Smith Corporation
- Slightly higher beta at 1.34, indicating similar stock price sensitivity to market swings and higher volatility risk.
4. Regulatory & Legal
Ingersoll Rand Inc.
- Operates globally with exposure to varied regulatory regimes affecting industrial equipment standards.
A. O. Smith Corporation
- Faces regulatory scrutiny in water treatment and energy efficiency standards across multiple regions, including China and Europe.
5. Supply Chain & Operations
Ingersoll Rand Inc.
- Complex supply chain across diverse industrial segments could face disruptions impacting operations and margins.
A. O. Smith Corporation
- Supply chain risks exist but are mitigated by focus on water-related products with established distribution networks.
6. ESG & Climate Transition
Ingersoll Rand Inc.
- Industrial sector exposure involves significant energy use; transition risks from tightening emissions regulations.
A. O. Smith Corporation
- Positioned to benefit from climate transition via energy-efficient water heaters and water treatment solutions.
7. Geopolitical Exposure
Ingersoll Rand Inc.
- Broad global footprint including volatile regions creates geopolitical risk and currency exposure.
A. O. Smith Corporation
- Geographic diversification present but more weighted to stable North American and Asian markets, reducing geopolitical risk.
Which company shows a better risk-adjusted profile?
A. O. Smith’s strongest risk is regulatory compliance complexity in multiple jurisdictions, while Ingersoll Rand’s primary risk lies in market overvaluation and operational complexity. A. O. Smith exhibits a superior risk-adjusted profile, supported by its higher profitability, stronger financial stability, and safer Altman Z-score (9.24 vs. 3.93). This reflects better capital allocation and resilience amid 2026’s industrial market challenges.
Final Verdict: Which stock to choose?
Ingersoll Rand Inc. shines with its operational resilience and strong liquidity, positioning it as a robust cash generator. However, its below-cost-of-capital returns signal a cautionary note for value-conscious investors. It suits portfolios chasing steady industrial exposure with moderate risk tolerance.
A. O. Smith Corporation boasts a clear strategic moat through superior capital efficiency and impressive return on invested capital. Its low leverage and strong profitability offer a safer harbor compared to Ingersoll Rand. It fits well in GARP portfolios prioritizing sustainable growth and financial strength.
If you prioritize value creation backed by a sustainable competitive advantage, A. O. Smith outshines due to its superior ROIC and financial stability. However, if you seek operational resilience with a focus on cash flow and are comfortable with a higher risk profile, Ingersoll Rand might offer compelling industrial exposure. Both choices require careful risk assessment aligned with your investment strategy.
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 Ingersoll Rand Inc. and A. O. Smith Corporation to enhance your investment decisions:
