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Azz Inc. (AZZ)
NYSE:AZZ
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AZZ
(NYSE:AZZ)
66Neutral
Positive Factors
Financial Performance
Steady organic growth, operational efficiencies, and expanding free cash flow drive a Buy rating with a price target of $108.
Market Position
AZZ is the US leader in galvanizing and coating with significant market shares, providing opportunities for continued expansion.
Negative Factors
Macro Environment
The margin strength is offset by a mixed macro environment, reflecting elevated expectations entering the earnings report.
Market Uncertainty
Private sector project spending has reverted lower given heightened levels of market uncertainty.
AZZ (AZZ) vs. S&P 500 (SPY)
Market Cap
$2.56B
Dividend Yield0.79%
Average Volume (3M)299.41K
Price to Earnings (P/E)81.9
Beta (1Y)1.33
Revenue Growth5.63%
EPS Growth-48.03%
CountryUS
Employees3,873
SectorIndustrials
Sector Strength67
IndustryCorporate Services
Share Statistics
EPS (TTM)1.05
Shares Outstanding29,882,175
10 Day Avg. Volume344,974
30 Day Avg. Volume299,411
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.55
Price to Cash Flow (P/CF)9.30
P/FCF Ratio11.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$105.25Price Target Upside22.73% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
AZZ Business Overview & Revenue Model
Company DescriptionAZZ Inc. is a leading provider of metal coating solutions, welding solutions, electrical equipment, and highly engineered services to a wide range of industries including power generation, transmission, distribution, and the industrial sector. The company operates primarily through two segments: Metal Coatings and Infrastructure Solutions. With a focus on delivering durable and reliable products, AZZ serves customers globally, helping them enhance performance and extend the life of their valuable assets.
How the Company Makes MoneyAZZ Inc. generates revenue primarily through its two main business segments: Metal Coatings and Infrastructure Solutions. The Metal Coatings segment provides hot-dip galvanizing and powder coating services, which are essential for protecting metal from corrosion and enhancing durability. This segment services a diverse customer base, including steel fabricators, manufacturers, and the construction industry. The Infrastructure Solutions segment offers specialized products and services such as switchgear, electrical enclosures, and automation systems, catering to industries like power generation, transmission, and distribution. These solutions help in improving operational efficiency and safety for their clients. Additionally, AZZ maintains strategic partnerships and long-term contracts with key players in various sectors, contributing to stable and recurring revenue streams.
AZZ Financial Statement Overview
Summary
AZZ presents solid financial performance with strong revenue growth and profitability metrics, underpinned by a stable balance sheet with reduced leverage. The company demonstrates efficient cash flow generation, though there is potential for enhanced cash flow growth. Risks are present in historical debt fluctuations, but current leverage is low, positioning AZZ well for future growth opportunities in the corporate services industry.Income Statement
AZZ has demonstrated strong revenue growth with a TTM (Trailing-Twelve-Months) increase from $1.54 billion to $1.59 billion, reflecting a healthy expansion trajectory. The gross profit margin stands at 24.17% and the net profit margin at 7.71%, indicating solid profitability. EBIT and EBITDA margins are also robust at 14.96% and 21.14% respectively. However, the growth in net income, although positive, is relatively moderate compared to revenue growth.78
Positive
Balance Sheet
AZZ's balance sheet shows a favorable equity position with an equity ratio of 45.87%. The debt-to-equity ratio has significantly decreased to 0.03, reflecting reduced leverage, which is a positive sign of financial stability. The return on equity (ROE) is 11.94%, indicating decent profitability for shareholders. However, fluctuations in the total debt levels over the years could pose potential risks if not managed well.65
Positive
Cash Flow
AZZ's cash flow statement reflects a strong operating cash flow to net income ratio of 2.03, showcasing efficient cash generation relative to net income. Free cash flow to net income ratio is 1.10, indicating good cash flow relative to earnings. However, the free cash flow growth rate has seen only moderate changes, suggesting room for improvement in cash management and capital efficiency.72
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.59B | 1.54B | 1.32B | 902.66M | 838.92M | 1.06B | Gross Profit |
| 385.01M | 363.46M | 295.94M | 225.22M | 188.75M | 237.23M | EBIT |
| 238.20M | 221.60M | 102.89M | 66.28M | 36.04M | 46.79M | EBITDA |
| 336.73M | 316.59M | 252.06M | 111.47M | 105.25M | 128.55M | Net Income Common Stockholders |
| 122.89M | 101.61M | 66.34M | 84.02M | 39.61M | 48.23M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.48M | 4.35M | 2.82M | 15.08M | 14.84M | 36.69M | Total Assets |
| 2.24B | 2.20B | 2.22B | 1.13B | 996.44M | 1.07B | Total Debt |
| 26.69M | 977.23M | 1.06B | 233.80M | 178.42M | 77.88M | Net Debt |
| 25.20M | 972.88M | 1.06B | 218.72M | 163.58M | 41.19M | Total Liabilities |
| 1.21B | 1.26B | 1.37B | 465.66M | 373.15M | 439.46M | Stockholders Equity |
| 1.03B | 934.49M | 853.46M | 667.37M | 623.29M | 634.37M |
| Cash Flow | Free Cash Flow | ||||
| 134.98M | 149.35M | 34.31M | 57.60M | 54.96M | 109.72M | Operating Cash Flow |
| 249.14M | 244.47M | 91.43M | 86.01M | 92.03M | 144.76M | Investing Cash Flow |
| -113.31M | -95.06M | -1.23B | -86.83M | -28.59M | -71.75M | Financing Cash Flow |
| -142.36M | -147.89M | 1.03B | 912.00K | -88.42M | -59.74M |
AZZ Technical Analysis
Neutral
85.76
Price Trends
90.28
Negative
88.55
Negative
83.58
Positive
Market Momentum
-1.81
Positive
42.89
Neutral
67.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AZZ, the sentiment is Neutral. The current price of 85.76 is below the 20-day moving average (MA) of 87.47, below the 50-day MA of 90.28, and above the 200-day MA of 83.58, indicating a neutral trend. The MACD of -1.81 indicates Positive momentum. The RSI at 42.89 is Neutral, neither overbought nor oversold. The STOCH value of 67.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AZZ.
AZZ Risk Analysis
AZZ disclosed 38 risk factors in its most recent earnings report. AZZ reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AZZ Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $4.14B | 36.44 | 13.77% | 0.37% | 9.99% | -4.18% | |
71 Outperform | $594.75M | 26.14 | 10.40% | ― | 10.92% | 100.59% | |
70 Neutral | $2.42B | 18.00 | 14.57% | 3.88% | 3.21% | 29.59% | |
67 Neutral | $819.95M | 194.05 | 0.67% | 1.42% | -2.47% | -87.25% | |
66 Neutral | $2.56B | 81.94 | 12.97% | 0.79% | 5.63% | -48.03% | |
62 Neutral | $8.27B | 14.02 | 2.58% | 3.08% | 3.83% | -15.91% | |
59 Neutral | $457.62M | 62.08 | 2.53% | 4.52% | 2.86% | -85.38% |
* Industrials Sector Average
Performance Comparison
AZZ
AZZ
84.00
7.79
10.22%
ASTE
Astec
35.91
-6.19
-14.70%
KAI
Kadant
351.20
25.20
7.73%
MYE
Myers Industries
11.90
-9.94
-45.51%
TRN
Trinity Industries
29.00
2.74
10.43%
WLDN
Willdan Group
41.28
12.04
41.18%
AZZ Earnings Call Summary
Earnings Call Date: Jan 7, 2025 | % Change Since: 1.41% | Next Earnings Date: Apr 18, 2025
Earnings Call Sentiment Positive
The earnings call showcased strong organic growth, robust EBITDA margins, and effective debt reduction strategies. However, challenges such as increased SG&A expenses and sensitivity to interest rate changes were noted. The overall outlook remains optimistic with strategic investments in new facilities and potential acquisitions.Highlights
Organic Sales Growth
Consolidated Q3 sales increased by 5.8% year-over-year, driven entirely by organic growth. Metal Coatings grew by 3.3% and Precoat Metals by 7.6%.
Strong EBITDA Margins
Metal Coatings EBITDA margin was 31.5%, exceeding the prior year and the target range of 25-30%. Precoat Metals EBITDA margin was 19.1%, also surpassing the previous year.
Debt Reduction
The company made substantial debt repayments totaling $80 million, with expectations to reduce debt by over $100 million for the fiscal year.
Cash Flow and Capital Allocation
Generated cash flows from operations at $185.6 million, with year-to-date free cash flow of $99.7 million. Capital expenditures were focused on growth and debt reduction.
Upcoming Facility Launch
The new aluminum coatings facility in Washington, Missouri, is on track to begin operations in Q1 of fiscal 2026, supporting strategic growth in aluminum conversions.
Lowlights
Increased SG&A Expenses
SG&A expenses increased to $39.2 million, or 9.7% of sales, primarily due to one-off employee retirement costs, severance expenses, and legal accruals.
Equity Earnings Decline
Equity in earnings of unconsolidated subsidiaries was $7.2 million, down from $8.7 million in the prior year quarter.
Interest Rate Sensitivity
Potential choppiness in project decision-making due to interest rate movements and tariff uncertainties.
Company Guidance
During the AZZ Q3 2025 earnings call, the executives provided detailed guidance on the company's outlook. They reported consolidated third-quarter sales of $404 million, marking a 5.8% year-over-year increase, driven by organic growth. The Metal Coatings segment saw a 3.3% rise in sales, with galvanizing growing by 5.2%, while the Precoat Metals segment rose by 7.6%. The company achieved an EBITDA margin of 31.5% in Metal Coatings and 19.1% in Precoat Metals. Cash flow from operations reached $186 million for the first nine months, enabling $80 million in debt repayment. AZZ narrowed its annual sales guidance to $1.55 billion to $1.6 billion and adjusted EBITDA to $340 million to $360 million. Adjusted EPS guidance was raised to $5 to $5.30. Capital expenditures are expected to remain at $100 million to $120 million. The company remains focused on organic growth and strategic acquisitions while planning to reduce debt by over $100 million by fiscal year-end.AZZ Corporate Events
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
AZZ Highlights Strategic Initiatives for Investor Meetings
Positive
Feb 5, 2025
AZZ Inc. has announced the preparation of presentation materials for investor meetings starting February 5, 2025. The materials highlight AZZ’s strategic journey, including past divestments, acquisitions, and a focus on metal coatings. The company aims to strengthen its market position by investing in new technologies, reducing leverage, and maintaining high returns on investment capital. The presentation underscores AZZ’s commitment to sustainability and outlines its achievements in reducing debt and improving financial performance, which provide a promising outlook for stakeholders.
Executive/Board ChangesBusiness Operations and Strategy
AZZ Announces Leadership Changes to Boost Growth
Positive
Jan 23, 2025
On January 16, 2025, AZZ Inc. announced the appointment of Jeff Vellines as President and Chief Operating Officer of the Precoat Metals business segment, effective March 1, 2025. Vellines, who has been with the company since 2011, will receive a comprehensive compensation package including a base salary, performance-based incentives, and equity awards. Kurt Russell, the current Chief Operating Officer, will transition to the role of Senior Vice President and Chief Strategic Officer to focus on strategic growth initiatives. These leadership changes align with AZZ’s strategic growth objectives and succession plans, highlighting the company’s emphasis on talent development and strategic execution.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.