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AOS vs ITW
Which Stock Would AI Choose? A. O. Smith (AOS) vs. Illinois Tool Works (ITW) Stock Comparison
Key Takeaways
- AOS is a pure-play water technology company, while ITW is a diversified multi-industrial manufacturer spanning seven segments.
- AOS shares have pulled back roughly 7% over the past month and are down double digits year-to-date, reflecting China headwinds and revised guidance.
- ITW has shown greater price stability, supported by best-in-class operating margins near 26% and a return on invested capital (ROIC) around 29%.
- Both are dividend stalwarts, but ITW has raised its dividend for 62 consecutive years versus AOS at more than 30 consecutive years.
- Relative positioning favors ITW on trend consistency and stability, while AOS offers a more discounted valuation and potential recovery catalysts.
Introduction
Investors comparing AOS (A. O. Smith Corporation) and ITW (Illinois Tool Works Inc.) are weighing two structurally different industrial franchises. One is a focused water heating, boiler, and water treatment manufacturer; the other is a diversified multi-industrial leader. This stock comparison matters for income-oriented and quality-focused investors seeking to understand relative performance, market positioning, and risk exposure between a company facing a specific geographic and technology challenge and one built for resilience across many end markets. Recent market activity has widened the divergence in momentum, making the comparison especially relevant for those evaluating where trend consistency and valuation currently stand.
AOS Overview and Recent Performance
A. O. Smith Corporation is a global leader in residential and commercial water heaters, boilers, and water treatment products, headquartered in Milwaukee, Wisconsin. The company operates two main segments: North America and the Rest of World, with significant exposure to China and a growing presence in India. In recent weeks, AOS shares have lost momentum, with the stock down roughly 7% over the past month and approximately 15% to 16% year-to-date. This pullback reflects a combination of factors, including persistent weakness in its China business, which is in structural decline, and downward revisions to full-year earnings guidance. Management has narrowed its earnings-per-share (EPS) outlook for 2026, citing softer residential demand and continued China headwinds. Sentiment has also been shaped by the upcoming 2029 U.S. heat pump water heater mandate, which some investors view as a risk to the company's plumber-driven distribution model. On the positive side, the North American franchise remains strong, with emergency replacement demand providing stability, a growing dividend, and an active share-repurchase program.
ITW Overview and Recent Performance
Illinois Tool Works Inc. is a Fortune 300 diversified industrial manufacturer with roughly $16 billion in annual revenue, operating across seven segments including Automotive OEM (original equipment manufacturer), Test & Measurement and Electronics, Food Equipment, Welding, Construction Products, Specialty Products, and Polymers & Fluids. The company's performance has been more stable than AOS in recent market activity. For full-year 2025, ITW reported revenue up about 1% and GAAP (Generally Accepted Accounting Principles) EPS of $10.49, with an operating margin near 26.3%. The company achieved a return on invested capital of roughly 29%, reflecting disciplined capital allocation. Shareholder returns remain a priority, with about $3.3 billion returned through dividends and buybacks in 2025 and a dividend raised for a 62nd consecutive year. Recent analyst sentiment has been mixed, with some firms citing valuation and softer end-market demand, though the company's diversified model and high margins have underpinned relative stability.
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Head-to-Head Comparison
The core contrast between these two stocks lies in focus versus diversification. AOS is a concentrated water technology play with a dominant North American position but meaningful exposure to a declining China market and a regulatory-driven technology transition in heat pumps. ITW spreads risk across seven segments, which generally smooths cyclical swings but also limits the upside from any single growth driver. In terms of recent momentum, ITW has held up better, with modest single-digit moves over recent periods, while AOS has experienced a sharper drawdown. On profitability, ITW clearly leads, with operating margins near 26% versus a mid-teens to low-20s range for AOS. On valuation, however, AOS trades at a discount to its historical average, whereas ITW carries a richer multiple. Risk factors differ as well: AOS faces company-specific China and regulatory risks, while ITW is more exposed to broad industrial demand and potential margin pressure from input costs.
Tickeron AI Verdict
Based on observable factors such as trend consistency, margin stability, diversification, and relative price behavior, Tickeron's AI would likely favor ITW over AOS in the current environment. ITW demonstrates more consistent technical stability, superior and more uniform profitability across its segments, and a diversified revenue base that reduces single-point risk. That said, AOS presents a potentially more attractive entry point from a valuation standpoint and carries identifiable catalysts, including a possible resolution of its China strategic review and progress toward higher-efficiency products. The assessment is probabilistic rather than definitive, and relative positioning could shift if AOS stabilizes its momentum or if industrial demand softens for ITW.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
To compare these two companies we present long-term analysis, their fundamental ratings and make comparative short-term technical analysis which are presented below. The conclusion is AOS is a Hold and ITW is a StrongBuy.
AOS | ITW | ||
|---|---|---|---|
OUTLOOK RATING 1..100 | 50 | 50 | |
VALUATION overvalued / fair valued / undervalued 1..100 | 15 Undervalued | 83 Overvalued | |
PROFIT vs RISK RATING 1..100 | 100 | 43 | |
SMR RATING 1..100 | 35 | 13 | |
PRICE GROWTH RATING 1..100 | 60 | 49 | |
P/E GROWTH RATING 1..100 | 63 | 32 | |
SEASONALITY SCORE 1..100 | 85 | 85 |
Tickeron ratings are formulated such that a rating of 1 designates the most successful stocks in a given industry, while a rating of 100 points to the least successful stocks for that industry.
AOS's Valuation (15) in the Building Products industry is significantly better than the same rating for ITW (83) in the Industrial Machinery industry. This means that AOS’s stock grew significantly faster than ITW’s over the last 12 months.
ITW's Profit vs Risk Rating (43) in the Industrial Machinery industry is somewhat better than the same rating for AOS (100) in the Building Products industry. This means that ITW’s stock grew somewhat faster than AOS’s over the last 12 months.
ITW's SMR Rating (13) in the Industrial Machinery industry is in the same range as AOS (35) in the Building Products industry. This means that ITW’s stock grew similarly to AOS’s over the last 12 months.
ITW's Price Growth Rating (49) in the Industrial Machinery industry is in the same range as AOS (60) in the Building Products industry. This means that ITW’s stock grew similarly to AOS’s over the last 12 months.
ITW's P/E Growth Rating (32) in the Industrial Machinery industry is in the same range as AOS (63) in the Building Products industry. This means that ITW’s stock grew similarly to AOS’s over the last 12 months.
| AOS | ITW | |
|---|---|---|
| RSI ODDS (%) | 4 days ago 58% | 4 days ago 50% |
| Stochastic ODDS (%) | 4 days ago 55% | 4 days ago 52% |
| Momentum ODDS (%) | 4 days ago 60% | 4 days ago 38% |
| MACD ODDS (%) | 4 days ago 60% | 4 days ago 56% |
| TrendWeek ODDS (%) | 4 days ago 61% | 4 days ago 54% |
| TrendMonth ODDS (%) | 4 days ago 63% | 4 days ago 50% |
| Advances ODDS (%) | 8 days ago 58% | 7 days ago 52% |
| Declines ODDS (%) | 6 days ago 61% | 13 days ago 41% |
| BollingerBands ODDS (%) | 4 days ago 59% | 4 days ago 53% |
| Aroon ODDS (%) | 4 days ago 71% | 4 days ago 40% |
Long-Term Analysis
It is best to consider a long-term outlook for a ticker by using Fundamental Analysis (FA) ratings. The rating of 1 to 100, where 1 is best and 100 is worst, is divided into thirds. The first third (a green rating of 1-33) indicates that the ticker is undervalued; the second third (a grey number between 34 and 66) means that the ticker is valued fairly; and the last third (red number of 67 to 100) reflects that the ticker is overvalued. We use an FA Score to show how many ratings show the ticker to be undervalued (green) or overvalued (red).
AOS’s FA Score shows that 1 FA rating(s) are green while ITW’s FA Score has 2 green FA rating(s).
- AOS’s FA Score: 1 green, 4 red.
- ITW’s FA Score: 2 green, 3 red.
Short-Term Analysis
It is best to consider a short-term outlook for a ticker by using Technical Analysis (TA) indicators. We use Odds of Success as the percentage of outcomes which confirm successful trade signals in the past.
If the Odds of Success (the likelihood of the continuation of a trend) for each indicator are greater than 50%, then the generated signal is confirmed. A green percentage from 90% to 51% indicates that the ticker is in a bullish trend. A red percentage from 90% - 51% indicates that the ticker is in a bearish trend. All grey percentages are below 50% and are considered not to confirm the trend signal.
AOS’s TA Score shows that 5 TA indicator(s) are bullish while ITW’s TA Score has 5 bullish TA indicator(s).
- AOS’s TA Score: 5 bullish, 4 bearish.
- ITW’s TA Score: 5 bullish, 3 bearish.
Price Growth
AOS (@Industrial Machinery) experienced а -0.65% price change this week, while ITW (@Industrial Machinery) price change was +0.46% for the same time period.
The average weekly price growth across all stocks in the @Industrial Machinery industry was +2.71%. For the same industry, the average monthly price growth was +2.38%, and the average quarterly price growth was +0.27%.
Reported Earning Dates
AOS is expected to report earnings on Oct 29, 2026.
ITW is expected to report earnings on Oct 27, 2026.
Industries' Descriptions
@Industrial Machinery (+2.71% weekly)The industry makes and maintains machines for consumers, the industry, and most other companies. While it has traditionally been categorized as heavy industry, some smaller companies are also branching into the light category. The industry is pivotal in providing the equipment for production in businesses like agriculture, mining, industry and construction, gas, electricity and water utilities. It also supplies supporting equipment for almost all sectors of the economy, such as equipment for heating, and air conditioning of buildings. Illinois Tool Works Inc., Parker-Hannifin Corporation and Rockwell Automation Inc are some of the major U.S. companies operating in this industry.
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ITW and
Correlation & Price change
A.I.dvisor indicates that over the last year, ITW has been closely correlated with IR. These tickers have moved in lockstep 74% of the time. This A.I.-generated data suggests there is a high statistical probability that if ITW jumps, then IR could also see price increases.