Start here if you're new
what it is
AAON builds commercial heating and cooling gear for offices, industrial buildings, and data centers.
how it gets paid
Last year Aaon made $1.44B in revenue.
why it's growing
Revenue grew 20.1% last year to $1.44B. Margins and EPS were under pressure from investment spend even as backlog rose 60.8% to $1.11B.
what just happened
AAON reported fourth-quarter diluted EPS of $0.39. Public consensus estimates were in the mid-$0.40s, so the quarter came in light versus expectations.
At a glance
B+ balance sheet — decent shape, but not bulletproof
55/100 earnings predictability — expect surprises
53.6x trailing p/e — you're paying up for this one
0.5% dividend yield — cash in your pocket every quarter
18.0% return on capital — nothing to write home about
xvary composite: 49/100 — below average
What they do
AAON builds commercial heating and cooling gear for offices, industrial buildings, and data centers.
AAON sells built-for-your-building HVAC systems, not generic boxes. Custom HVAC means replacing it often requires redesign work, downtime, and a contractor headache you do not volunteer for. The company also operated five manufacturing facilities totaling more than 4 million square feet at year-end 2025, which helps it stay close to customers who need fast delivery.
How they make money
$1.44B
annual revenue · their business grew +20.1% last year
total revenue
$1.44B
+20.1%
The products that matter
manufactures commercial heating and cooling systems
Commercial HVAC Equipment
over $1B annual activity
it's the operating base that management describes as a $1B-plus business. AAON posted $1.44B in revenue for 2025, up 20.1% vs. prior year.
core business
specialty data-center cooling systems
BASX data-center cooling
~$200M run rate → $1B target
management says this business can exceed $1B in annual sales by 2028 from a recent run rate of roughly $200M. that's the growth thesis, the premium multiple, and the short thesis in one sentence.
the key bet
Key numbers
53.6x
trailing p/e
P/E → how many dollars you pay for $1 of profit → so what: AAON is priced for a clean growth story after a dirty earnings year.
$1.29
2025 GAAP EPS
GAAP diluted EPS fell from $2.02 in 2024 to $1.29 in 2025 per the FY2025 filing narrative—investments hit reported earnings before the multiple contracted.
18.0%
return on capital
Return on capital → profit earned on money invested in the business → so what: the operating engine is still better than average even with the noise.
3
10%+ customers
Three customers each represented more than 10% of 2025 revenue, so customer concentration still matters even with a larger top line.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 30 / 100
- long-term debt $398.3M revolver borrowings
- net profit margin 7.5% — keeps about 8 cents of every dollar in revenue
- return on equity about 12% — a solid year, but well below the prior margin peak
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in AAON 3 years ago → it's now worth $15,760.
The index would have given you $13,920.
source: institutional data · total return
What just happened
missed estimates
AAON reported fourth-quarter diluted EPS of $0.39 versus public consensus in the mid-$0.40s.
The clean number from the annual report is the reported $0.39. Earlier source blending created an internal contradiction here, so this section now sticks to the filed result and a clearly labeled consensus comparison.
$424.2M
revenue
$0.39
eps
27.1%
gross margin
the number that mattered
The reported $0.39 EPS matters most because premium stocks rarely get to miss expectations and keep the same multiple.
-
indeed, since our october review, the maker of semi-custom commercial hvac systems has seen its shares slide more than 15% in price, versus a median advance of roughly 1% for the other 40-plus names within the category over the same 13-week span.
-
the sell-off leaves the stock some 38% below the $117.68 level in which it started 2025, even as the benchmark s&p 500 index was on pace to rise more than 15%.
-
serious questions have been raised about the company’s basx business.
-
in a scathing 57-page report, jehoshaphat research is on record saying that wall street’s intermediate projections for aaon’s pretax earnings are probably more than 30% too high, due to overly optimistic assumptions with regard to basx, the data-center-cooling (dcc) solutions business that aaon acquired in december, 2021.underpinning jehoshaphat’s pessimism is, in part, what it sees as aaon’s insufficient scale, vis-a-vis other dcc providers, and a major supply deal with a hyperscaler that it suspects will ultimately amount to low-margin contract manufacturing for aaon. the shortselling firm has also accused the company of creative accounting that is, in effect, front loading sales and putting aaon at increased risk of having to restate past results.
-
the various headwinds that aaon currently faces are making a deep dive into basx a bit tough.profit margins have already been under considerable pressure for several quarters, amid an admittedly rollout of a new enterprise-resource-planning system and the ramp up of a new manufacturing facility in memphis. still, if management has it right, sales of the company’s data center solutions will exceed $1 billion a year as early as 2028, up from a recent annual run rate of roughly $200 million.
source: company earnings report, 2026
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What could go wrong
the #1 risk is BASX revenue recognition and data-center cooling credibility.
high
BASX accounting and restatement risk
Jehoshaphat Research alleges BASX sales were recognized too early. If that allegation is right, this stops being a debate over growth rates and turns into a debate over trust in reported results.
it puts the business management wants to take from roughly $200M to more than $1B by 2028 under a cloud and threatens the premium multiple built on that story.
med
ERP rollout and Memphis ramp execution
management has pointed to the ERP rollout and new Memphis facility as margin drags for several quarters. That explanation only works if the numbers improve soon.
the latest quarter showed a -607.0% margin. If operations fail to normalize, investors will stop treating this as cleanup noise and start treating it as weaker economics.
med
legacy commercial HVAC cyclicality
AAON still sells into a commercial HVAC market that depends on project timing, customer budgets, and replacement cycles. There is no data here proving BASX is large enough to offset a slower core business on its own.
if the legacy business cools while BASX is still under debate, the stock is left with a premium valuation and fewer places to hide.
a forced reset of BASX growth assumptions or BASX accounting would hit the exact part of the story investors are paying 53.6x trailing earnings for.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
BASX run-rate progress
management is talking about $1B by 2028 from roughly $200M today. you want to see that gap start closing in reported results, not just in presentation slides.
trend
margin recovery
track whether margins recover from the latest -607.0% quarterly print as the ERP rollout and Memphis ramp move out of the excuse phase and into the proof phase.
calendar
management's next BASX response
the next earnings call matters less for slogans and more for specifics: order quality, customer mix, revenue timing, and whether management answers the short report cleanly.
risk
institutional conviction
institutions hold 73.0M shares and were modest net buyers last quarter. if that flips hard in the next filing cycle, the market is telling you trust is getting worse, not better.
Analyst rankings
short-term outlook
below average
momentum score 4 — analysts see weaker near-term performance than most stocks from here.
risk profile
average
stability score 3 — not especially safe, not a disaster by historical volatility alone.
chart momentum
top 20%
technical score 2 — one ranking says the chart still screens well while another says the near-term setup is weak. in human-speak, the signals disagree.
earnings predictability
55 / 100
earnings can surprise you here. after the current reporting mess, that is a warning label, not a minor footnote.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 210 buyers vs. 203 sellers in 3q2025. total institutional holdings: 73.0M shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$54
$137
$75
current price
$96
target midpoint · +28% from current · 3-5yr high: $150 (+100% · 19% ann'l return)
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