Home > Comparison > Industrials > PNR vs AOS
The strategic rivalry between Pentair plc and A. O. Smith Corporation shapes the industrial machinery sector’s competitive landscape. Pentair, a UK-based water solutions provider, balances residential and industrial filtration with complex fluid technologies. A. O. Smith, headquartered in the US, focuses on residential and commercial water heating and treatment products. This analysis probes their contrasting operational models and growth strategies to identify which offers superior risk-adjusted returns for a diversified portfolio.
Table of contents
Companies Overview
Pentair plc and A. O. Smith Corporation stand as key players in the global industrial machinery market, shaping water solutions worldwide.
Pentair plc: Global Water Solutions Leader
Pentair plc dominates water treatment and fluid management markets with two segments: Consumer Solutions and Industrial & Flow Technologies. It generates revenue by selling residential and commercial pool equipment, water filtration systems, and advanced membrane filtration products. In 2026, Pentair focuses on expanding its industrial technologies and enhancing water purification capabilities to address growing environmental demands.
A. O. Smith Corporation: Comprehensive Water Heating Innovator
A. O. Smith Corporation commands the residential and commercial water heating industry with a broad portfolio including gas, electric, and solar water heaters. Its revenue streams rely on water heaters, boilers, and water treatment products sold across North America, China, Europe, and India. The company’s 2026 strategy emphasizes global expansion and e-commerce growth to deepen market penetration and consumer reach.
Strategic Collision: Similarities & Divergences
Both companies compete in industrial water management but adopt contrasting philosophies: Pentair champions a diversified product ecosystem across filtration and fluid technologies, while A. O. Smith focuses on integrated water heating solutions and direct consumer sales. Their battleground lies in residential and commercial water treatment innovation. Pentair appeals to investors seeking industrial diversification; A. O. Smith attracts those favoring consumer-driven growth and international scale.
Income Statement Comparison
This table dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Pentair plc (PNR) | A. O. Smith Corporation (AOS) |
|---|---|---|
| Revenue | 4.18B | 3.83B |
| Cost of Revenue | 2.49B | 2.34B |
| Operating Expenses | 833M | 759M |
| Gross Profit | 1.69B | 1.49B |
| EBITDA | 944M | 792M |
| EBIT | 826M | 729M |
| Interest Expense | 69M | 14M |
| Net Income | 654M | 546M |
| EPS | 3.99 | 3.86 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals which company runs a more efficient and profitable corporate engine in 2025.
Pentair plc Analysis
Pentair’s revenue grew modestly to $4.18B in 2025, with net income rising to $654M. The company maintains strong gross and net margins at 40.5% and 15.7%, respectively. Margins improved steadily, reflecting operational efficiency and solid cost control, driving a favorable earnings per share growth of nearly 6% year-over-year.
A. O. Smith Corporation Analysis
A. O. Smith posted $3.83B in revenue for 2025, showing minimal growth but improving net income to $546M. Its gross margin stands at 38.8%, slightly below Pentair’s, while net margin is 14.3%. Despite slower top-line momentum, the firm’s EPS surged over 6%, supported by disciplined cost management and low interest expenses.
Margin Strength vs. Earnings Momentum
Pentair edges out A. O. Smith with higher margins and stronger net income growth. Both firms display favorable income statements, but Pentair’s superior margin expansion and revenue growth mark it as the more fundamentally robust operator. Investors favoring margin resilience will likely find Pentair’s profile more attractive.
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 below:
| Ratios | Pentair plc (PNR) | A. O. Smith Corporation (AOS) |
|---|---|---|
| ROE | 16.90% | 25.64% |
| ROIC | 12.46% | 23.94% |
| P/E | 26.14 | 17.13 |
| P/B | 4.42 | 4.39 |
| Current Ratio | 1.61 | 1.50 |
| Quick Ratio | 0.95 | 0.94 |
| D/E | 0.42 | 0.09 |
| Debt-to-Assets | 23.86% | 6.11% |
| Interest Coverage | 12.36 | 53.93 |
| Asset Turnover | 0.61 | 1.22 |
| Fixed Asset Turnover | 11.08 | 5.62 |
| Payout Ratio | 25.13% | 35.83% |
| Dividend Yield | 0.96% | 2.09% |
| Fiscal Year | 2025 | 2025 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios serve as the company’s DNA, uncovering hidden risks and operational strengths that shape investment decisions.
Pentair plc
Pentair’s return on equity stands at a solid 16.9%, with a net margin of 15.66%, signaling efficient core profitability. However, its P/E ratio of 26.14 marks the stock as somewhat expensive compared to peers. Dividend yield is modest at 0.96%, reflecting limited shareholder returns, likely due to reinvestment in R&D and growth initiatives.
A. O. Smith Corporation
A. O. Smith delivers strong profitability with a 25.64% ROE and 14.26% net margin, demonstrating high operational efficiency. Its P/E ratio of 17.13 appears fairly valued, offering a less stretched entry point. The company rewards shareholders with a 2.09% dividend yield, indicating a balanced approach between returns and reinvestment.
Operational Strength vs. Valuation Appeal
A. O. Smith combines higher returns on equity and capital with a more reasonable valuation, suggesting a superior risk-reward balance. Pentair shows solid profitability but trades at a premium, with lower dividend payouts. Growth-oriented investors might lean toward Pentair, while income-focused investors may prefer A. O. Smith’s steadier yield and valuation.
Which one offers the Superior Shareholder Reward?
I see Pentair (PNR) delivers a conservative dividend yield near 0.96% with a payout ratio around 25%, supported by strong free cash flow coverage (~3.5x). Its buyback activity is modest but consistent, preserving capital for growth. A. O. Smith (AOS) offers a higher dividend yield near 2.1%, with a payout ratio close to 36%, slightly pressuring free cash flow coverage (~2.3x). AOS also executes more aggressive buybacks, enhancing total return but with higher payout risk. Historically, Pentair’s distribution model is more sustainable amid market cycles due to prudent capital allocation and lower leverage. I conclude Pentair offers a superior total return profile for risk-conscious investors in 2026.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Pentair plc and A. O. Smith Corporation, highlighting their contrasting financial strengths and weaknesses:
A. O. Smith outperforms Pentair with a higher overall score (4 vs. 3) and excels in ROE and debt management, reflecting superior profitability and balance sheet strength. Pentair displays a strong ROA but lags in debt-to-equity and valuation metrics. A. O. Smith offers a more balanced profile, while Pentair relies on asset efficiency as its key edge.
Bankruptcy Risk: Solvency Showdown
The Altman Z-Score gap between Pentair (4.21) and A. O. Smith (8.33) signals both firms in the safe zone, with A. O. Smith holding a significantly stronger solvency buffer for long-term survival in this cycle:
Financial Health: Quality of Operations
Pentair’s Piotroski score of 8 versus A. O. Smith’s 7 indicates Pentair maintains very strong operational health and financial quality. Both firms display solid fundamentals, but Pentair shows a slight edge in internal metrics stability:
How are the two companies positioned?
This section dissects the operational DNA of Pentair and A. O. Smith by comparing their revenue distribution and internal dynamics. The goal is to confront their economic moats to identify which model offers the most resilient competitive advantage today.
Revenue Segmentation: The Strategic Mix
The following visual comparison dissects how both firms diversify their income streams and where their primary sector bets lie:
Pentair plc displays a balanced revenue portfolio with FY 2024 figures showing $1.51B from Industrial & Flow Technologies, $1.44B in Pool, and $1.13B in Water Unit. This diversified mix mitigates concentration risk. A. O. Smith Corporation lacks available segment data, preventing direct comparison. Pentair’s spread signals strategic flexibility and less dependency on a single sector, favoring resilience in fluctuating markets.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of Pentair plc and A. O. Smith Corporation:
Pentair plc Strengths
- Diverse segments with Industrial & Flow Technologies, Pool, Water Unit revenue streams
- Favorable net margin at 15.66%
- Strong ROE at 16.9% and ROIC at 12.46%
- Conservative leverage with debt-to-assets at 23.86%
- Favorable fixed asset turnover at 11.08
- Significant US and Western Europe sales
A. O. Smith Corporation Strengths
- Higher ROE at 25.64% and ROIC at 23.94% indicating efficient capital use
- Favorable net margin at 14.26%
- Low debt-to-assets at 6.11% with strong interest coverage of 54.03
- Superior asset turnover at 1.22
- Broader global footprint with North America and Rest of World revenue segments
- Higher dividend yield at 2.09%
Pentair plc Weaknesses
- Elevated price-to-earnings (PE) ratio at 26.14, potentially overvalued
- High price-to-book (PB) ratio at 4.42
- Dividend yield under 1%, less attractive for income investors
- Quick ratio neutral at 0.95, indicating moderate liquidity
- Asset turnover neutral at 0.61, less efficient usage
A. O. Smith Corporation Weaknesses
- WACC unfavorable at 10.06%, higher cost of capital
- Price-to-book ratio also high at 4.39
- Current and quick ratios neutral at 1.5 and 0.94, moderate liquidity
- PE ratio neutral at 17.13, less stretched than Pentair
Both companies show favorable profitability and capital efficiency, but Pentair carries valuation premiums and moderate liquidity risk. A. O. Smith exhibits stronger capital efficiency and liquidity but faces a higher cost of capital. These contrasts influence strategic priorities such as valuation management for Pentair and cost of capital optimization for A. O. Smith.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only true shield protecting long-term profits from relentless competitive erosion in industrial machinery companies:
Pentair plc: Diverse Product Ecosystem with Cost-Effective Integration
Pentair’s moat stems from its broad water solutions portfolio, leveraging cost advantages and brand synergy. It maintains stable 15.7% net margins but faces a declining ROIC trend in 2026. New industrial filtration innovations could deepen its lead if execution sustains.
A. O. Smith Corporation: Superior ROIC and Expanding Market Reach
A. O. Smith’s moat relies on strong operational efficiency and expanding global footprint. Its ROIC outpaces WACC by nearly 14%, with growth accelerating. Unlike Pentair, A. O. Smith’s profitability rises, driven by innovative water heaters and global sales expansion.
Cost Leadership vs. ROIC Momentum: The Moat Showdown
A. O. Smith boasts a wider, more sustainable moat, combining high ROIC with growth momentum. Pentair creates value but suffers shrinking profitability. A. O. Smith is better positioned to defend and grow market share in 2026.
Which stock offers better returns?
Over the past year, Pentair plc’s stock rose sharply before decelerating, while A. O. Smith Corporation’s shares declined overall but gained momentum recently.
Trend Comparison
Pentair plc’s stock gained 20.65% over the past 12 months, showing a bullish trend with decelerating momentum. Its price ranged from a low of 74.39 to a high of 112.23.
A. O. Smith Corporation’s shares fell 10.01% over the year, reflecting a bearish trend but with accelerating recovery in recent months, including a 20.38% rise since late November 2025.
Pentair outperformed A. O. Smith overall, delivering the highest market return despite recent weakness in its price trajectory.
Target Prices
Analysts present a clear target price consensus for both Pentair plc and A. O. Smith Corporation.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Pentair plc | 90 | 135 | 118.56 |
| A. O. Smith Corporation | 75 | 85 | 78 |
The consensus target for Pentair at 118.56 suggests upside potential versus the current 97.28 price. A. O. Smith’s target consensus near 78 aligns closely with its current 78.37 price, indicating a more balanced outlook.
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How do institutions grade them?
The following presents a summary of recent institutional grades for Pentair plc and A. O. Smith Corporation:
Pentair plc Grades
This table shows the latest grade updates from major financial institutions for Pentair plc.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Citigroup | Maintain | Buy | 2026-02-04 |
| Oppenheimer | Maintain | Outperform | 2026-02-04 |
| JP Morgan | Maintain | Overweight | 2026-01-16 |
| Citigroup | Maintain | Buy | 2026-01-12 |
| BNP Paribas Exane | Downgrade | Underperform | 2026-01-07 |
| TD Cowen | Downgrade | Sell | 2026-01-05 |
| Jefferies | Upgrade | Buy | 2025-12-10 |
| Barclays | Downgrade | Equal Weight | 2025-12-04 |
| Oppenheimer | Maintain | Outperform | 2025-11-20 |
| Barclays | Maintain | Overweight | 2025-10-22 |
A. O. Smith Corporation Grades
The following table summarizes recent institutional grade actions 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?
Pentair plc shows a broader range of grades, including Buy and Outperform ratings, but also notable downgrades to Underperform and Sell. A. O. Smith Corporation holds a consistent Neutral to Buy range with no recent downgrades. Investors may interpret Pentair’s mixed signals as higher volatility in analyst sentiment, while A. O. Smith’s steady grades suggest more stability.
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
Pentair plc
- Operates globally with diversified water treatment segments but faces pressure from innovation-driven competitors.
A. O. Smith Corporation
- Strong presence in North America and growing in Asia; faces intense competition in water heaters and filtration.
2. Capital Structure & Debt
Pentair plc
- Moderate leverage with debt-to-assets at 23.9%. Interest coverage strong at 11.9x, but debt-to-equity score moderate.
A. O. Smith Corporation
- Low leverage with debt-to-assets at 6.1%. Interest coverage very strong at 54x. Balance sheet notably stronger.
3. Stock Volatility
Pentair plc
- Beta at 1.22 indicates moderate volatility relative to the market.
A. O. Smith Corporation
- Beta at 1.34 shows slightly higher stock volatility, reflecting sensitivity to market swings.
4. Regulatory & Legal
Pentair plc
- Exposed to complex water treatment regulations globally, including EU standards.
A. O. Smith Corporation
- Faces stringent product safety and environmental standards especially in North America and China markets.
5. Supply Chain & Operations
Pentair plc
- Global operations depend on diverse suppliers; risks from geopolitical tensions and raw material costs.
A. O. Smith Corporation
- Extensive manufacturing footprint; supply chain resilient but vulnerable to trade policy shifts and component shortages.
6. ESG & Climate Transition
Pentair plc
- Increasing ESG pressure to reduce water footprint and improve energy efficiency in products.
A. O. Smith Corporation
- Strong ESG initiatives focused on energy-efficient water heating; well-positioned for climate transition.
7. Geopolitical Exposure
Pentair plc
- UK-based with global exposure; subject to Brexit-related trade barriers and global trade tensions.
A. O. Smith Corporation
- US-based with significant operations in China and India, exposing it to US-China trade risks and regional instability.
Which company shows a better risk-adjusted profile?
Pentair’s moderate debt and global regulatory complexity pose meaningful risks, but solid operational metrics provide some cushion. A. O. Smith’s low leverage and strong interest coverage reduce financial risk, though higher stock volatility and geopolitical exposure remain concerns. A. O. Smith edges ahead with a more robust balance sheet and superior ROIC versus WACC spread. Its Altman Z-score of 8.3 versus Pentair’s 4.2 further confirms safer financial footing. However, Pentair’s diversified product range and stable dividend yield offer competitive resilience. Investors should weigh A. O. Smith’s financial strength against Pentair’s market diversification risks.
Final Verdict: Which stock to choose?
Pentair’s superpower lies in its consistent value creation through efficient capital use, evidenced by a solid ROIC above WACC. However, its declining profitability trend is a point of vigilance. This stock fits well within aggressive growth portfolios that tolerate cyclical pressures for potential upside.
A. O. Smith’s moat stems from its impressive and growing profitability combined with a rock-solid balance sheet. It offers greater financial safety compared to Pentair, supported by low debt levels and strong interest coverage. This stock suits GARP investors seeking steady growth with reasonable risk.
If you prioritize aggressive growth and can tolerate some margin pressure, Pentair outshines with its efficient capital deployment. However, if you seek better stability and a durable competitive advantage, A. O. Smith offers superior financial health and a more sustainable profitability trajectory. Both present compelling analytical scenarios depending on your risk appetite and investment horizon.
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 Pentair plc and A. O. Smith Corporation to enhance your investment decisions:
