AAON, INC. (AAON): what the price assumes

In the published model solve dated 2026-Q2, anchored at $76.50, AAON, INC. (AAON) is priced for today's economics sustained for ~7.1 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/AAON

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 8: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.6% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• AAON now runs two different businesses under one ticker: engineered-to-order rooftop HVAC units for buildings, and, through its BASX brand, cooling equipment for data centers that produced $228.6 million of first-quarter revenue and carries a $1.62 billion order book.
• Gross margin slipped to 25.1% from 26.8% a year earlier even as revenue rose 54.3%, so the live question is whether the new plants convert volume into the 27% to 28% full-year gross margin management has guided to.
• The next read is the second-quarter report on August 10, 2026, where the two lines that matter are BASX bookings and whether gross margin has started climbing back.

Bull Case

For four straight quarters, AAON's BASX brand has booked more than two dollars of new orders for every dollar it shipped. That is what a $1.62 billion backlog sitting on $228.6 million of quarterly BASX revenue actually means: the order book is filling faster than the factories can empty it.

The company producing that order book is not the one most investors met a decade ago. AAON built its name on semi-custom rooftop units for schools, hospitals and retail buildings, sold through independent manufacturer representatives and engineered to order rather than pulled off a shelf. BASX applied the same made-to-order discipline to a different customer: the operators building data centers, who need air handling and liquid cooling designed around a specific hall rather than a standard specification. In the first quarter of 2026, BASX-branded sales rose 72.4% to $228.6 million while AAON-branded sales rose 41.6% to $268.4 million. The smaller brand is growing faster and now accounts for roughly three-quarters of a $2.13 billion total backlog.

Two things make that demand look structural rather than lumpy. The first is duration. A book-to-bill above two for four consecutive quarters is not one enormous order landing in one period; it is a customer base ordering faster than a supplier can build, repeatedly. The second is that the binding constraint has been capacity rather than orders. AAON has been commissioning plant space in Longview, Texas and in Memphis, and management has described that footprint as able to carry revenue past $2 billion without another heavy construction cycle. The full-year outlook was raised to revenue growth of 40% to 45%, up from 18% to 20% three months earlier.

The margin line is where the bull case has to do real work, and it holds up better than the headline reads. Gross margin of 25.1% in the first quarter came in below the 26.8% of a year earlier, which is the classic shape of a manufacturer buying volume. Management's account is that the incremental volume carries attractive contribution and that margin improvement is being sequenced deliberately rather than surrendered. The earnings line supports that reading: diluted earnings per share rose 37.1% to $0.48 in the same quarter. The percentage fell; the dollars did not.

There is a quieter structural point underneath all of it. Engineered-to-order equipment resists commoditization in a way catalog product does not, because the customer is buying a design fitted to a particular building or a particular data hall, and switching suppliers means re-engineering rather than re-ordering. That is why a company of AAON's size can sit in the same sentence as Carrier, Johnson Controls, Trane and Lennox without being run over by them. It is not competing on the same shelf.

The expansion has also been financed without asking existing holders to pay for it. Share count has risen about 0.7% a year across a four-year span, close to flat for a business that more than doubled its backlog. The capital has come from borrowing instead, which is a genuine risk and the bear's best material, but it leaves the per-share claim on all of this growth intact for the people who already own it.

Bear Case

Everything in the order book can be true and the price can still be the problem. At $104.81 the market is paying roughly 54 times company-wide operating income, and what that multiple asks for is not faster growth but longer growth: today's economics, sustained for something like 13 years, before the business settles into an ordinary terminal pace.

That framing moves the argument off the usual ground, and it is worth being precise about where the stretch actually sits. It is not the near-term pace. Measured against its own record, the rate embedded in the price is roughly what AAON has been delivering. The stretch is persistence. Among companies that have compounded at that pace, only about one in seven held it for a decade. The multiple itself sits at the very top of its peer distribution rather than inside it, well beyond the upper quartile of the comparable set.

Where the price does find support is narrow. The asset-based lenses land at roughly a sixth of it. The earnings-power lenses land in the same neighborhood. Peer multiples on revenue and on earnings reach a little under half. Only the forward cash flow methods get to today's price, and the one that lands closest does it by holding the exit multiple flat at today's level across a seven-year forecast, with no expansion assumed anywhere. Take that single assumption away and no method is left that supports the price.

Three things could break the persistence assumption, and none of them requires a recession.

The first is concentration in a young end market. BASX now carries $1.62 billion of the $2.13 billion backlog, and data center thermal orders come from a small number of very large buyers whose capital plans move together. A backlog of that shape is an asset while the cycle runs and a single point of failure when it turns, because the same handful of decisions that filled it can stop refilling it at once.

The second is the margin path. Gross margin was 25.1% in the first quarter against 26.8% a year earlier, while the full-year guide calls for 27% to 28%. Hitting that range requires the back half of the year to run well above where the first quarter ran, on plants that are still ramping. Manufacturers scaling into a demand surge routinely find that the last increment of volume costs more to serve than the first, and the guidance leaves little room for that to happen.

The third is the balance sheet, which is carrying more of this story than its absence from the headlines suggests. AAON held $1.1 million of cash against $425.2 million drawn on its credit facility at March 31, 2026, up from $398.3 million three months earlier, while spending $52.9 million on capital projects in a quarter that generated $34.0 million of operating cash flow. The growth is being funded rather than self-funded. That is an ordinary way to build capacity against a real order book, and it is also why a demand pause would be felt quickly: interest cost and capital commitments do not pause when orders do.

None of this argues the order book is illusory. It argues that the price already assumes the order book keeps refilling for more than a decade, and that the balance sheet has less slack than it would want if it stopped.

Valuation

Start with what $104.81 asks for. Not a step change in profitability: the operating margin embedded in the price, about 9.4%, is actually below the 10.5% operating margin AAON has been earning on a trailing basis. What the price asks for is time. It wants the current level of economics held for something like 13 years before fading toward an ordinary terminal rate, which is a longer runway than industrial equipment businesses are usually granted.

AAON's own trailing numbers are modest against that. Revenue of roughly $1.6 billion, operating income of about $159 million, book value of $11.23 a share. Value the company on what it owns, or on what it earns today with no growth credited, and the answer lands near a sixth of what the shares cost. Apply peer multiples to its revenue and its earnings and the answer improves to a little under half. Only the forward cash flow methods reach the price at all, and the closest of them rests on a single condition: that the exit multiple holds where it is across a seven-year forecast instead of expanding.

That pattern has a specific meaning, and it is not that the market has mispriced this year. When every static method sits far below the price and only the growth-based ones reach it, the disagreement is not about current earnings. The market is paying for durability that static methods structurally cannot see, because they value the business as it stands rather than as an order book that keeps replenishing.

The mix explains why the multiple sits where it does among peers. AAON is valued at the top of a distribution that includes Carrier, Johnson Controls, Trane, Lennox and, on the data center side, Vertiv, rather than in the middle of it. That is consistent with what the revenue has become: roughly 38% of it now comes from BASX-branded equipment, and about three-quarters of the backlog does, which means a growing share of the company is being priced against data center capital spending rather than against commercial building construction.

The balance sheet changes the risk profile rather than the valuation. At the end of the first quarter AAON carried $425.2 million of borrowings against $1.1 million of cash, having spent $52.9 million on capital projects in a quarter that produced $34.0 million of operating cash flow. Share count has risen about 0.7% a year across four annual periods, so the buildout has been financed with debt rather than dilution. That is the trade a holder has already made: the per-share claim on the order book was protected, and the flexibility to absorb a slow year was spent.

Catalysts

The next scheduled event is the second-quarter report on August 10, 2026, released after the close with a call at 5:00 p.m. Eastern. Two lines in it carry most of the information. The first is BASX bookings: a book-to-bill that stays above one keeps the backlog growing, while a print near or below one would be the first evidence that data center orders are being worked down rather than added to. The second is gross margin, which has to climb from the first quarter's 25.1% for the guided 27% to 28% full-year range to survive contact with the second half.

The finance function changed hands in the middle of the expansion. Andy Cheung took over as chief financial officer on April 20, 2026, with Rebecca Thompson moving to chief accounting officer. Cheung arrived from the top finance role at Commercial Vehicle Group and has been described as focused on margin discipline and working capital efficiency. At a company converting a large order book into shipments, that is a specific mandate rather than a generic one: working capital is precisely where the cash either shows up or disappears while inventory and receivables build ahead of delivery.

Capacity is the third thing to track, and it is the hardest to see from outside. Longview and Memphis were commissioned to carry revenue past $2 billion, so the question through the back half of 2026 is throughput on assets already built rather than another construction cycle. Lead times are the tell. AAON let its own branded backlog fall 3.1% sequentially in the first quarter by deliberately pushing production higher, which shortens customer lead times and is the opposite of what a company short of capacity would be able to do.

Peer Cohorts (Per Segment, With Filing Citations)

AAON Oklahoma / AAON Coil Products (reported)

• CARR (CARRIER GLOBAL CORPORATION)
• FY2025 10-K: …our products and services, we are a significant competitor with respect to each of our major product and service offerings. We believe that the loss of any individual contract or customer would not have a material adverse effect on our results. Raw Materials and Supplies We rely on suppliers and commodity markets to…
• FY2025 10-K: …Company performs under the contract. The Company recognized revenue of $ 506 million for the year ended December 31, 2025, that was related to contract liabilities as of January 1, 2025. The Company expects a majority of its contract liabilities at the end of the period to be recognized as revenue over the next 12…
• JCI (JOHNSON CONTROLS INTERNATIONAL PLC)
• FY2025 10-K: National Association, as trustee, and Elavon Financial Services DAC, as paying agent, attaching forms of the 0.375% Senior Notes due 2027 and the 1.000% Senior Notes due 2032 (incorporated by reference to Exhibit 4.2 to the registrant's Current Report on Form 8-K filed on September 15, 2020) 4.6 Seventh Supplemental…
• FY2025 10-K: 5-09-30 0000833444 us-gaap:OperatingSegmentsMember jci:APACSegmentMember 2023-10-01 2024-09-30 0000833444 us-gaap:OperatingSegmentsMember jci:APACSegmentMember 2022-10-01 2023-09-30 0000833444 us-gaap:CorporateNonSegmentMember 2024-10-01 2025-09-30 0000833444 us-gaap:CorporateNonSegmentMember 2023-10-01 2024-09-30…
• LII (LENNOX INTERNATIONAL INC)
• FY2025 10-K: …2025-12-31 0001069202 us-gaap:AccumulatedTranslationAdjustmentMember 2025-12-31 0001069202 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2023-12-31 0001069202 us-gaap:AociEquityMethodInvestmentParentMember 2023-12-31 0001069202 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2023-12-31 0001069202…
• FY2025 10-K: 01 2023-12-31 0001069202 us-gaap:OperatingSegmentsMember lii:CommercialHeatingAndCoolingMember 2023-01-01 2023-12-31 0001069202 us-gaap:CorporateNonSegmentMember 2023-01-01 2023-12-31 0001069202 us-gaap:OperatingSegmentsMember srt:RevisionOfPriorPeriodChangeInAccountingPrincipleAdjustmentMember…
• TT (TRANE TECHNOLOGIES PLC)
• FY2025 10-K: …that could be triggered in the event of nonperformance. Additionally, for completed energy savings contracts, the Company has ongoing performance guarantees related to the customers' realization of committed energy savings that are evaluated during the measurement and verification portion of contracting and…
• FY2025 10-K: …us-gaap:OtherNonoperatingIncomeExpenseMember 2023-01-01 2023-12-31 0001466258 us-gaap:SegmentDiscontinuedOperationsMember us-gaap:PostretirementBenefitCostsMember 2025-01-01 2025-12-31 0001466258 us-gaap:SegmentDiscontinuedOperationsMember us-gaap:PostretirementBenefitCostsMember 2024-01-01 2024-12-31 0001466258…
• AOS (A. O. Smith Corporation)
• FY2025 10-K: …2023-01-01 2023-12-31 0000091142 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2022-12-31 0000091142 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2023-01-01 2023-12-31 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE…
• FY2025 10-K: …1999 to 2013 17 Table of Contents PART II ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market Information . Our Common Stock is listed on the New York Stock Exchange under the symbol AOS. Our Class A Common Stock is not listed. EQ Shareowner…

BASX (reported)

• CARR (CARRIER GLOBAL CORPORATION)
• FY2025 10-K: …brands and on strengthening our long-term relationships with channel partners and customers by offering solutions that anticipate customer needs with a focus on technologies related to energy efficiency, emissions, air quality, electrification, refrigerants with lower global warming potential and noise reduction.…
• FY2025 10-K: SegmentsMember us-gaap:ServiceMember carr:ClimateSolutionsAmericasMember 2024-01-01 2024-12-31 0001783180 us-gaap:OperatingSegmentsMember us-gaap:ServiceMember carr:ClimateSolutionsAmericasMember 2023-01-01 2023-12-31 0001783180 us-gaap:OperatingSegmentsMember carr:ClimateSolutionsAmericasMember 2023-01-01 2023-12-31…
• JCI (JOHNSON CONTROLS INTERNATIONAL PLC)
• FY2025 10-K: …The amendments require that on an annual basis, entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments require that entities disclose additional information about income taxes paid as…
• FY2025 10-K: …and services; fluctuations in currency exchange rates; the ability to hire and retain senior management and other key personnel; changes or uncertainty in laws, regulations, rates, policies, or interpretations that impact business operations or tax status; the ability to adapt to global climate change, climate change…
• TT (TRANE TECHNOLOGIES PLC)
• FY2025 10-K: 1466258 tt:ExtendedWarrantyMember 2023-12-31 0001466258 tt:ExtendedWarrantyMember 2024-01-01 2024-12-31 0001466258 tt:ExtendedWarrantyMember 2025-12-31 0001466258 tt:ExtendedWarrantyMember 2023-01-01 2023-12-31 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark…
• FY2025 10-K: …0001466258 2025 FY false 00000 http://fasb.org/us-gaap/2025#OtherAssetsCurrent http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2025#OtherAssetsCurrent http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2025#OtherLiabilitiesNoncurrent iso4217:USD xbrli:shares…
• LII (LENNOX INTERNATIONAL INC)
• FY2025 10-K: …13, 2024 and incorporated herein by reference). 101 SCH Inline XBRL Taxonomy Extension Schema Document 101 CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101 LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101 PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 101 DEF…
• FY2025 10-K: …and sustainable applications. Previously, he held various leadership positions at General Electric Corporation and McKinsey & Company. Mr. Maskara also serves on the board of Franklin Electric (Nasdaq: FELE) a company focused on global water and fluid solutions. Mr. Maskara graduated with a bachelor of technology…
• VRT (Vertiv Holdings Co)
• FY2025 10-K: …our business, results of operations and financial condition may be adversely affected by fluctuations in currency exchange rates, most notably if the U.S. dollar strengthens against the primary foreign currencies, which could adversely impact our revenue growth in future periods. For example, if the U.S. dollar…
• FY2025 10-K: …interest rate fluctuations. Conversely, if interest rates are lower than our swapped fixed rates, we will be required to pay more for our debt than we would have had we not entered into the interest rate swap agreements. We incur significant costs and devote substantial management time as a result of operating as a…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.