Comparing Smith (A.O.) (AOS) & iRobot (IRBT)

Smith (A.O.) (NYSE: AOS) and iRobot (NASDAQ:IRBT) are both industrial products companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.

Risk & Volatility

Smith (A.O.) has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500. Comparatively, iRobot has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.

Insider and Institutional Ownership

74.8% of Smith (A.O.) shares are held by institutional investors. Comparatively, 90.2% of iRobot shares are held by institutional investors. 1.3% of Smith (A.O.) shares are held by insiders. Comparatively, 4.5% of iRobot shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Smith (A.O.) and iRobot’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Smith (A.O.) $3.00 billion 3.61 $296.50 million $2.17 29.12
iRobot $883.91 million 1.98 $50.96 million $1.77 35.60

Smith (A.O.) has higher revenue and earnings than iRobot. Smith (A.O.) is trading at a lower price-to-earnings ratio than iRobot, indicating that it is currently the more affordable of the two stocks.

Dividends

Smith (A.O.) pays an annual dividend of $0.72 per share and has a dividend yield of 1.1%. iRobot does not pay a dividend. Smith (A.O.) pays out 33.2% of its earnings in the form of a dividend. Smith (A.O.) has raised its dividend for 12 consecutive years.

Profitability

This table compares Smith (A.O.) and iRobot’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Smith (A.O.) 10.10% 23.77% 12.73%
iRobot 5.90% 12.95% 9.59%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Smith (A.O.) and iRobot, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Smith (A.O.) 0 2 7 0 2.78
iRobot 1 5 4 0 2.30

Smith (A.O.) presently has a consensus target price of $68.83, suggesting a potential upside of 8.91%. iRobot has a consensus target price of $69.25, suggesting a potential upside of 9.90%. Given iRobot’s higher probable upside, analysts clearly believe iRobot is more favorable than Smith (A.O.).

Summary

Smith (A.O.) beats iRobot on 12 of the 17 factors compared between the two stocks.

About Smith (A.O.)

A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, and water treatment products in North America, China, Europe, and India. The company offers water heaters for residences, restaurants, hotels and motels, office buildings, laundries, car washes, and small businesses; residential and commercial boilers for use in space heating applications for hospitals, schools, hotels, and other large commercial buildings; and water treatment products, including on-the-go filtration bottles, point-of-use carbon and reverse osmosis products, point-of-entry water softeners, and whole-home water filtrations products for residences, restaurants, hotels, and offices. It also provides food and beverage filtration products; expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, and related products and parts; and heat pump and combi boilers, solar units, and air purification products. The company distributes its products through independent wholesale plumbing distributors, as well as through retail channels consisting of hardware and home center chains, and manufacturer representative firms. A. O. Smith Corporation is headquartered in Milwaukee, Wisconsin.

About iRobot

iRobot Corporation designs, builds, and sells robots for the consumer market worldwide. It offers Roomba floor vacuuming robots; Braava family of automatic floor mopping robots; and Mirra Pool Cleaning Robot to clean residential pools and removes debris as small as two microns from pool floors, walls, and stair. The company sells its robots through various distribution channels, including chain stores and other national retailers, its online store, and value-added distributors and resellers. iRobot Corporation was founded in 1990 and is headquartered in Bedford, Massachusetts.

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