AZZ (AZZ) AI Stock Analysis

• Market Cap: $2.45B
• Dividend Yield: 0.83%
• Average Volume (3M): 269.17K
• Price to Earnings (P/E): 77.7
• Beta (1Y): 1.20
• Revenue Growth: 5.63%
• EPS Growth: -48.03%
• Country: US
• Employees: 3,873
• Sector: Industrials
• Sector Strength: 70
• Industry: Manufacturing - Metal Fabrication
• EPS (TTM): 1.05
• Shares Outstanding: 29,882,175
• 10 Day Avg. Volume: 245,918
• 30 Day Avg. Volume: 269,170
• PEG Ratio: N/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 Ratio: 11.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $108.00
• Price Target Upside: 31.69% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

AZZ's overall stock score reflects a strong financial performance with robust profitability metrics and effective debt management. However, technical analysis suggests caution with downward momentum and high valuation metrics indicating potential overvaluation. Positive earnings call sentiment and strategic corporate events support a stable outlook, balancing the technical and valuation concerns.

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

Market Uncertainty

Private sector project spending has reverted lower in recent months given heightened levels of market uncertainty.

Volume Growth

The 2FQ deceleration in volume growth is a partial offset to the margin gains given some concern over the sustainability of the elevated profitability profile.

AZZ Business Overview & Revenue Model

Company Description

AZZ Inc. offers galvanizing and metal coating solutions, welding solutions, specialty electrical equipment, and engineered services to the power generation, transmission, distribution, refining, and industrial markets in the United States and internationally. The company operates through two segments, Infrastructure Solutions and Metal Coatings. The Metal Coatings segment offers metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing, and plating to the steel fabrication and other industries. It serves fabricators or manufacturers that provide services to the electrical and telecommunications, bridge and highway, petrochemical, and general industrial markets, as well as original equipment manufacturers. The Infrastructure Solutions segment provides products and services to support industrial and electrical applications. It offers custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting, and tubular products, as well as solutions and engineering resources to multi-national companies. This segment sells its products through internal sales force, manufacturers' representatives, distributors, and agents. The company was incorporated in 1956 and is headquartered in Fort Worth, Texas.

How the Company Makes Money

AZZ 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 a 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.

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.

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.

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
110.61M	4.35M	2.82M	15.08M	14.84M	36.69M
	Total Assets
381.96M	2.20B	2.22B	1.13B	996.44M	1.07B
	Total Debt
100.00M	977.23M	1.06B	233.80M	178.42M	77.88M
	Net Debt
-10.61M	972.88M	1.06B	218.72M	163.58M	41.19M
	Total Liabilities
154.10M	1.26B	1.37B	465.66M	373.15M	439.46M
	Stockholders Equity
227.87M	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

• Technical Analysis Sentiment: Negative
• Last Price: 82.01
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AZZ, the sentiment is Negative. The current price of 82.01 is below the 20-day moving average (MA) of 82.73, below the 50-day MA of 88.79, and below the 200-day MA of 83.86, indicating a bearish trend. The MACD of -1.81 indicates Negative momentum. The RSI at 46.11 is Neutral, neither overbought nor oversold. The STOCH value of 71.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AZZ.

AZZ Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NWPX	74 Outperform	$418.42M	12.17	9.58%	―	10.81%	63.68%
AZZ	68 Neutral	$2.45B	77.69	12.97%	0.83%	5.63%	-48.03%
WOR	66 Neutral	$2.37B	39.66	6.56%	1.41%	-69.82%	-78.10%
MEC	65 Neutral	$254.43M	10.04	10.78%	―	-1.16%	227.49%
RYI	64 Neutral	$690.53M	37.86	-1.00%	3.45%	-9.98%	-106.51%
IIIN	63 Neutral	$519.77M	27.20	5.79%	0.45%	-11.06%	-14.18%
Sector *	63 Neutral	$4.29B	11.05	5.73%	232.30%	4.75%	-5.69%

AZZ Corporate Events

AZZ Highlights Strategic Initiatives for Investor Meetings

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.

AZZ Announces Leadership Changes to Boost Growth

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.