- ^GSPC
- AAON
Record third-quarter revenue of $707.4 million, driven by demand for data center cooling systems, sent AAON (NASDAQ:AAON) soaring 37.8% this week.
AAON stock changed hands at $78.80 as of the close on Thursday, Nov. 12, up 37.8% this week from Friday, Nov. 6’s close through Thursday, Nov. 12’s close, according to data provided by S&P Global Market Intelligence. Over the same period, the S&P 500 (SNPINDEX:^GSPC) gained 2.9%, and the Nasdaq-100 was up 4.8%.
Record Q3 sales and data center cooling demand
On Tuesday, the company reported third-quarter net sales of $707.4 million, up 84.1% year over year, topping analyst expectations of $601.2 million. Adjusted earnings per share reached $0.83, more than double the prior-year period’s $0.37. Sales from its BASX brand, which manufactures specialized liquid-cooling equipment for artificial intelligence data centers, surged 218% to $397.2 million.
AAON manufactures custom heating, ventilation, and air conditioning (HVAC) equipment and specialized liquid-cooling systems for commercial, industrial, and data center customers. Demand for high-density computing requires heavy-duty thermal management to prevent server overheating. The rapid ramp-up in data center orders accelerated total sales, prompting management to raise its full-year sales growth forecast to 72%-75%.
Alongside the record sales, the company disclosed a material weakness in internal controls over financial reporting, which required a first-half results restatement, though the adjustment added $10.7 million to revenue. Management also expanded its senior credit facility to $1.2 billion to fund factory capacity. The surge in data center cooling revenue confirms that AAON’s thermal management business is capturing high-margin demand from AI infrastructure builds despite internal accounting control fixes.
Valuation and what’s next for AAON
AAON stock trades at a trailing price-to-earnings (P/E) ratio of 32.3. AAON’s trailing P/E of 32.3 sits within a peer range spanning Lennox International at 15.7, Trane Technologies at 29.8, and Modine Manufacturing at 44.4, so the multiple on its own does not say whether the stock is cheap or expensive; execution on the data center order backlog does.
Investors should focus on whether the company can maintain manufacturing throughput without expanding control issues when it reports fourth-quarter results on March 1, 2027.
Is AAON stock a buy?
While AAON stock seems to trade at a high sales multiple, it’s important to recognize that shares are changing hands at a discount to their historical valuation — their five-year average P/E is 48. Between this and management’s belief that the company is poised for strong revenue growth, AAON stock is well worth further investigation for those seeking data center exposure.
