Download PDF

1. Company Snapshot

1.a. Company Description

AAON, Inc., together with its subsidiaries, engages in engineering, manufacturing, marketing, and selling air conditioning and heating equipment in the United States and Canada.The company operates through three segments: AAON Oklahoma, AAON Coil Products, and BasX.It offers rooftop units, data center cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls.


The company markets and sells its products to retail, manufacturing, educational, lodging, supermarket, data centers, medical and pharmaceutical, and other commercial industries.It sells its products through a network of independent manufacturer representative organizations and internal sales force.The company was incorporated in 1987 and is based in Tulsa, Oklahoma.

Show Full description

1.b. Last Insights on AAON

AAON, Inc.'s recent performance was driven by strong Q3 2025 results, with net sales up 17.4% to $384.2 million, driven by continued demand, improved ERP efficiency, and increased production throughput. The company's robust bookings trends and record backlog of $1.32 billion, up 103.8% year-over-year, indicate continuing market share gains. However, temporary disruptions from ERP implementation, tariffs, and growth initiatives have weakened AAON's margins. AI-related data center investments have boosted the BasX brand, with its backlog surging by 119%. Institutional investors, such as Arcadia Investment Management Corp MI and Jackson Square, have increased their stakes in the company.

1.c. Company Highlights

2. AAON's Q3 Earnings: A Strong Recovery and Growth Story

AAON's third-quarter financial performance was marked by a significant year-over-year increase in net sales, rising by $57 million or 17.4% to $384.2 million. The company's gross margin was 27.8%, down from 34.9% in the prior year, but up 120 basis points sequentially. Non-GAAP adjusted EBITDA margin was 16.5%, down from 25.3% a year ago, but up 160 basis points in the previous quarter. The company's actual EPS came out at $0.37, beating estimates of $0.33.

Publication Date: Nov -11

📋 Highlights
  • BASX Backlog Surge: $896.8M backlog, up 119.5% YoY and 43.9% QoQ, driven by data center demand.
  • Net Sales Growth: $384.2M revenue (+17.4% YoY) fueled by 95.8% BASX sales increase and Memphis production ramp.
  • Gross Margin Recovery: 27.8% margin (-7.1% YoY) but +120 bps QoQ sequential improvement amid production recovery.
  • 2024 Guidance: Mid-teens full-year sales growth with 28–28.5% gross margin and $180M CapEx for Memphis expansion.
  • Memphis Facility Capacity: Memphis production ramping smoothly, with 40% headroom for additional orders by late 2025.

Segment Performance

The BASX brand continues to be a key growth driver for AAON, fueled by strong demand in the data center market. BASX-branded backlog grew to $896.8 million, up 119.5% from a year ago and up 43.9% from the prior quarter. The company's ACP segment also experienced strong growth, with margins around 27% absent discrete items. According to Matthew Tobolski, the ACP segment is expected to be at least a 30% business, driving improvement in gross margin.

Operational Highlights

AAON's production throughput at both the Tulsa and Longview facilities improved substantially, driving meaningful sequential sales growth. The company has applied lessons learned from Longview to Memphis, including streamlining automation and process flow in the ERP to reduce manual interaction and enhance production velocity. The Memphis facility has a good backlog to help ramp it up, with headroom for more orders, especially in the second half of next year.

Guidance and Outlook

For the fourth quarter, AAON expects double-digit revenue growth driven by continued production recovery and pricing actions implemented earlier this year. The company now anticipates full-year sales growth in the mid-teens at a gross margin of 28% to 28.5%. Looking ahead to 2026, AAON plans to implement the ERP system at its Tulsa facility, which may result in some short-term production impact during the transition.

Valuation

AAON's current valuation metrics indicate a P/E Ratio of 86.05, a P/B Ratio of 9.99, and an EV/EBITDA of 45.77. With analysts estimating next year's revenue growth at 12.3%, the company's valuation appears to be largely justified by its growth prospects. However, investors should monitor the company's ability to execute on its growth plans and manage production costs.

3. NewsRoom

Card image cap

AAON Announces Promotion of Doug Wichman to EVP & General Manager Role

Dec -01

Source: prnewswire.com

Card image cap

BLI Banque de Luxembourg Investments Invests $4.57 Million in AAON, Inc. $AAON

Dec -01

Source: defenseworld.net

Card image cap

Arcadia Investment Management Corp MI Increases Stake in AAON, Inc. $AAON

Nov -15

Source: defenseworld.net

Card image cap

Jackson Square Buys 89,000 shares of HVAC Company AAON (Nasdaq: AAON) While Selling Nvidia

Nov -12

Source: fool.com

Card image cap

AAON Announces Quarterly Cash Dividend

Nov -12

Source: prnewswire.com

Card image cap

AAON, Inc. (AAON) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

Card image cap

AI Investments Are Surging, But So Is AAON's Valuation (Rating Downgrade)

Nov -07

Source: seekingalpha.com

Card image cap

Aaon (AAON) Surpasses Q3 Earnings and Revenue Estimates

Nov -06

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.63%)

6. Segments

AAON Oklahoma

Expected Growth: 11%

AAON Oklahoma's 11% growth is driven by increasing demand for energy-efficient HVAC solutions, strategic expansion into new markets, and growing adoption of its proprietary technology. Additionally, the segment benefits from a strong backlog of orders, favorable industry trends, and effective cost management.

BASX

Expected Growth: 9%

BASX from AAON, Inc. growth driven by increasing demand for energy-efficient HVAC solutions, government incentives for green buildings, and rising construction activities in commercial and industrial sectors, contributing to 9% growth.

AAON Coil Products

Expected Growth: 10%

AAON Coil Products' 10% growth is driven by increasing demand for energy-efficient HVAC systems, growing adoption of modular construction, and rising need for indoor air quality solutions. Additionally, AAON's focus on innovation, quality, and customer service contributes to its market share expansion.

7. Detailed Products

Rooftop Units

AAON's rooftop units are designed for outdoor installation and provide heating, cooling, and ventilation to commercial and industrial buildings.

Air Handling Units

AAON's air handling units are designed for indoor installation and provide heating, cooling, and ventilation to commercial and industrial buildings.

Condenser Coils

AAON's condenser coils are designed for outdoor installation and provide efficient heat transfer for air conditioning and refrigeration systems.

Chillers

AAON's chillers are designed for outdoor installation and provide efficient cooling for large commercial and industrial applications.

Packaged Outdoor Units

AAON's packaged outdoor units are designed for outdoor installation and provide heating, cooling, and ventilation to commercial and industrial buildings.

Fan Coil Units

AAON's fan coil units are designed for indoor installation and provide heating, cooling, and ventilation to commercial and industrial buildings.

8. AAON, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for AAON, Inc. is medium due to the availability of alternative products and services in the HVAC industry.

Bargaining Power Of Customers

The bargaining power of customers for AAON, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for AAON, Inc. is medium due to the company's dependence on a few key suppliers for raw materials.

Threat Of New Entrants

The threat of new entrants for AAON, Inc. is low due to the high barriers to entry in the HVAC industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for AAON, Inc. is high due to the competitive nature of the HVAC industry, with many established players vying for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.67%
Debt Cost 7.89%
Equity Weight 93.33%
Equity Cost 7.89%
WACC 7.89%
Leverage 7.15%

11. Quality Control: AAON, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Beacon Roofing Supply

A-Score: 5.0/10

Value: 5.6

Growth: 7.3

Quality: 3.3

Yield: 0.0

Momentum: 8.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
LP

A-Score: 4.8/10

Value: 3.8

Growth: 7.0

Quality: 6.6

Yield: 2.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

View Full Report
Stock-Card
Fortune Brands

A-Score: 4.2/10

Value: 5.1

Growth: 4.6

Quality: 5.1

Yield: 3.0

Momentum: 1.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Advanced Drainage Systems

A-Score: 4.1/10

Value: 2.7

Growth: 6.7

Quality: 6.6

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
Trex

A-Score: 4.0/10

Value: 3.9

Growth: 5.8

Quality: 6.7

Yield: 0.0

Momentum: 2.5

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
AAON

A-Score: 3.7/10

Value: 2.2

Growth: 8.1

Quality: 5.8

Yield: 0.0

Momentum: 3.0

Volatility: 3.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

87.53$

Current Price

87.53$

Potential

-0.00%

Expected Cash-Flows