Smith AO Corporation (AOS)
Return on equity (ROE)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 556,600 | 235,700 | 487,100 | 344,900 | 370,000 |
| Total stockholders’ equity | US$ in thousands | 1,844,400 | 1,747,700 | 1,832,200 | 1,848,300 | 1,666,800 |
| ROE | 30.18% | 13.49% | 26.59% | 18.66% | 22.20% |
December 31, 2023 calculation
ROE = Net income ÷ Total stockholders’ equity
= $556,600K ÷ $1,844,400K
= 30.18%
A.O. Smith Corp.'s return on equity (ROE) has exhibited fluctuating performance over the past five years. The ROE stood at 30.18% at the end of December 31, 2023, a significant increase compared to the prior year's 13.49%. This indicates that the company generated a profit of $0.3018 for every dollar of shareholders' equity in 2023. The substantial improvement in ROE suggests that management efficiently utilized the equity financing to generate profits for the shareholders.
In comparison, the ROE was at 26.59% in 2021, 18.66% in 2020, and 22.20% in 2019. These values reflect a mixed performance in terms of profitability and efficiency in using shareholders' equity. Overall, the company has shown the ability to deliver above-average returns on equity over the years, with fluctuations possibly attributed to changes in the company's financial structure, profitability, or efficiency in generating profits.
Investors and stakeholders may view the increasing trend in ROE positively, as it indicates the company's capacity to deliver higher returns on the shareholders' investments. However, they should closely monitor future ROE trends to assess the sustainability and consistency of A.O. Smith Corp.'s profitability and operational efficiency.
Peer comparison
Dec 31, 2023