AZEK Company (AZEK) AI Stock Analysis

• Market Cap: $7.16B
• Dividend Yield: N/A
• Average Volume (3M): 5.68M
• Price to Earnings (P/E): 50.0
• Beta (1Y): 1.46
• Revenue Growth: 6.59%
• EPS Growth: 30.00%
• Country: US
• Employees: 2,000
• Sector: Industrials
• Sector Strength: 78
• Industry: Construction
• EPS (TTM): 0.99
• Shares Outstanding: 143,847,920
• 10 Day Avg. Volume: 2,587,997
• 30 Day Avg. Volume: 5,677,063
• PEG Ratio: 1.67
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 13.48
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $54.00
• Price Target Upside: 8.50% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

AZEK's strong financial performance and positive earnings call sentiment are key strengths, reflecting robust profitability and strategic growth initiatives. However, the high P/E ratio suggests a premium valuation, which poses a risk if growth expectations aren't met. Technical indicators suggest stable yet cautious growth potential.

Positive Factors

Acquisition Premium

James Hardie announced it will acquire AZEK for $8.75 billion, or a 37% premium to Friday’s close.

Synergies and Growth

Management pointed to $500 million in commercial synergies, including $125 million in cost synergies, cross-sell opportunities across the contractor landscape, and shared wood conversion stories as key selling points.

Negative Factors

Deal Completion Uncertainty

The ~20% decline in JHX's value is larger than anticipated and a number of investors have questioned whether the deal ultimately reaches the finish line.

Market Performance Concerns

The possibility of another bidder is low, and therefore AZEK shares were downgraded to Market Perform.

AZEK Company Business Overview & Revenue Model

Company Description

The AZEK Company Inc. engages in designing, manufacturing, and selling building products for residential, commercial, and industrial markets in the United States. It operates through two segments: Residential and Commercial. The Residential segment designs and manufactures engineered outdoor living products, which includes decking, railing, trim and moulding, and accessories under the TimberTech, AZEK Exteriors, VERSATEX, and ULTRALOX brand name. Its Commercial segment manufactures engineered polymer materials that is used in various industries, which includes outdoor, graphic displays and signage, educational, and recreational markets, as well as the food processing and chemical industries. This segment also offers bathroom partitions, shower and dressing stalls, lockers, and other storage solutions under the Aria, Eclipse, Hiny Hiders, TuffTec, and Duralife brand name to schools, parks, stadium arenas, industrial plants, and retail, recreational, and commercial facilities. The company was formerly known as CPG Newco LLC and changed its name to The AZEK Company Inc. in June 2020. The AZEK Company Inc. was incorporated in 2013 and is headquartered in Chicago, Illinois.

How the Company Makes Money

AZEK Company generates revenue through the sale of its high-performance building materials, primarily targeting residential and commercial construction markets. The primary revenue streams include the sale of decking, railing, and trim products under its prominent brands, TimberTech and AZEK Exteriors. The company benefits from a robust distribution network, which includes partnerships with professional dealers, home improvement retailers, and direct sales channels. Additionally, AZEK leverages its focus on sustainability and innovation to command premium pricing on its products, as they offer longer life spans and reduced maintenance costs compared to traditional wood materials. These factors, combined with a growing demand for eco-friendly building solutions, contribute to AZEK's financial performance.

AZEK Company Financial Statement Overview

Summary

AZEK exhibits a strong financial footing with robust profitability, efficient cash flow management, and a solid balance sheet. The company demonstrates consistent revenue growth, efficient operations, and minimal financial risk due to low leverage.

Income Statement

AZEK's income statement shows strong performance with a consistent increase in revenue over the years. The TTM data indicates a Gross Profit Margin of 37.3% and a Net Profit Margin of 9.8%, reflecting efficient cost management and profitability. The EBIT and EBITDA margins at 37.1% and 21.7% respectively indicate strong operational performance. Revenue growth from the previous year is healthy, suggesting a positive growth trajectory.

Balance Sheet

The balance sheet is stable with a low Debt-to-Equity Ratio of 0.002, indicating minimal leverage and financial risk. The Equity Ratio stands at a robust 63.8%, showcasing a strong equity position. Return on Equity (ROE) at 10.5% signifies decent returns to shareholders. The company's liquidity with significant cash reserves further strengthens its financial position.

Cash Flow

AZEK's cash flow statement reveals a solid cash generation capability. The Operating Cash Flow to Net Income Ratio is 1.7, indicating strong cash flow relative to net income. The Free Cash Flow has grown significantly compared to previous periods, reflecting efficient capital expenditure management and financial health. The Free Cash Flow to Net Income Ratio of 1.2 further highlights effective cash utilization.

Breakdown
Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
1.44B	1.37B	1.36B	1.18B	899.26M
	Gross Profit
541.79M	437.65M	409.32M	389.95M	296.05M
	EBIT
212.09M	123.79M	128.94M	142.13M	-20.84M
	EBITDA
387.95M	258.97M	236.81M	244.76M	40.45M
	Net Income Common Stockholders
153.38M	62.36M	67.16M	88.86M	-122.23M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
164.03M	278.31M	120.82M	250.54M	215.01M
	Total Assets
2.17B	2.42B	2.38B	2.19B	1.93B
	Total Debt
3.30M	593.22M	590.88M	464.71M	473.89M
	Net Debt
-160.72M	314.91M	470.06M	214.18M	258.88M
	Total Liabilities
810.85M	1.01B	938.65M	760.67M	627.97M
	Stockholders Equity
1.36B	1.41B	1.44B	1.43B	1.30B
Cash Flow		Free Cash Flow
147.33M	274.00M	-66.60M	32.56M	2.77M
	Operating Cash Flow
224.48M	362.54M	105.83M	207.68M	98.36M
	Investing Cash Flow
49.14M	-88.50M	-280.18M	-175.07M	-113.79M
	Financing Cash Flow
-387.91M	-116.54M	44.62M	2.92M	124.50M

AZEK Company Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 49.77
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AZEK, the sentiment is Positive. The current price of 49.77 is above the 20-day moving average (MA) of 47.47, above the 50-day MA of 46.03, and above the 200-day MA of 46.35, indicating a bullish trend. The MACD of 0.90 indicates Negative momentum. The RSI at 60.31 is Neutral, neither overbought nor oversold. The STOCH value of 94.74 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AZEK.

AZEK Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AZEK	76 Outperform	$7.16B	49.98	10.73%	―	6.59%	30.00%
AAON	73 Outperform	$7.84B	47.86	21.61%	0.46%	2.75%	-5.43%
SSD	73 Outperform	$6.46B	20.03	18.11%	0.72%	1.38%	-3.80%
TREX	73 Outperform	$6.22B	27.82	28.90%	―	5.17%	10.39%
LPX	66 Neutral	$6.03B	14.63	26.08%	1.23%	13.95%	138.97%
Sector *	63 Neutral	$4.21B	11.55	5.28%	250.72%	4.13%	-9.42%
FBIN	59 Neutral	$6.29B	13.82	20.02%	1.80%	-0.37%	18.78%

AZEK Company Corporate Events

AZEK Company Announces Leadership Transition and Succession

The AZEK Company Inc. announced the resignation of Peter Clifford, the Senior Vice President, Chief Operations Officer, and Chief Financial Officer, effective January 24, 2025, as he pursues a new opportunity outside the building products industry. Ryan Lada will succeed Clifford as the Senior Vice President, Chief Financial Officer, and Treasurer, while Matthew Wiora will become the Chief Accounting Officer. The leadership transition is part of AZEK’s planned succession and highlights the company’s focus on maintaining strong financial leadership. These changes are expected to help AZEK continue executing its strategy, strengthening its market presence, and driving growth.