AZZ Inc. (AZZ) | Investment Case

1. Company Snapshot

1.a. 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.

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1.b. Last Insights on AZZ

AZZ Inc.'s recent performance was negatively impacted by missing Q2 earnings and revenue estimates, with quarterly earnings of $1.55 per share, below the Zacks Consensus Estimate of $1.56 per share. The company's Precoat Metals sales declined 4.3% year-over-year. Additionally, despite secular tailwinds and solid execution, concerns around valuation and decelerating growth persist. AZZ's Infrastructure Solutions segment reported an Adjusted EBITDA of $(2.3) million. The company completed a galvanizing facility acquisition in Canton, Ohio, for $30.1 million.

1.c. Company Highlights

Last Price	105.15
Change Percentage	-1.53%
Open	106.71
Previous Close	106.78
Market Cap ( Millions)	3161
Volume	98042
Year High	119.95
Year Low	70.9
M A 50	102.35
M A 200	98.79

FCF Yield	12.88%
Dividend Yield	0.70%
ROE	27.36%
Debt / Equity	45.84%
Net Debt / EBIDTA	120.37%
Price To Book	2.42
Price Earnings Ratio	10.06
Price To FCF	7.76
Price To sales	1.98
EV / EBITDA	7.58

2. AZZ's Q2 Results Exceed Expectations, Driven by Strong Metal Coatings Performance

AZZ reported solid second-quarter results, with total sales increasing 2% to $417.3 million and adjusted earnings per share rising 13.1% to $1.55, slightly missing analyst estimates of $1.56. Operating cash flow improved by 23% to $58.4 million, driven by the company's strong Metal Coatings segment, which achieved double-digit sales growth due to higher volumes and infrastructure project activity. Consolidated adjusted EBITDA was $88.7 million, reflecting a margin of 21.3%. The company's liquidity position and balance sheet are strong, with a low debt-to-EBITDA ratio of 0.06, positioning AZZ to pursue strategic growth opportunities.

Publication Date: Oct -09

                                    📋 Highlights
                                    Sales & Earnings Growth:
                                                Total sales rose 2% to $417.3M; adjusted EPS increased 13.1% to $1.55.
Segment Performance:
                                                Metal Coatings drove double-digit sales growth; Precoat Metals offset 9-10% market decline with 3-4% tariff-driven share gains.
Cash Flow & Liquidity:
                                                Operating cash flow grew 23% to $58.4M; low debt-to-EBITDA ratio supports growth opportunities.
Margin Expansion:
                                                Metal Coatings achieved 30-31% margins; Precoat exceeded 20% margins, while Washington facility caused a $2M Q2 margin drag.
Strategic Growth</li>  
<li><b>M&A & Share Buybacks:
                                                $20M share repurchase planned; nine M&A opportunities in pipeline; $1M revenue from Canton acquisition in Q2.

                                

Segment Performance

The Metal Coatings segment drove the company's strong performance, with double-digit sales growth driven by higher volumes and infrastructure project activity. Precoat Metals faced mixed market conditions, but gained market share due to tariffs on imported pre-painted metal, with a boost of around 3-4%, offsetting a roughly 9-10% market decline. The company expects to sustain this market share and benefit from it in the future.

Guidance and Outlook

AZZ reiterated guidance for total sales ($1.625 billion to $1.725 billion), EBITDA ($360 million to $400 million), and adjusted EPS ($5.75 to $6.25) for fiscal 2026. The company sees a multi-year tailwind in infrastructure spending, particularly in energy and power generation capacity. The guidance for adjusted EBITDA remains unchanged, with $14 million to $15 million of available EBITDA impact from last year versus zero Q2, Q3, and Q4 for AVAIL.

Valuation and Growth Prospects

With a P/E Ratio of 9.64 and an EV/EBITDA ratio of 6.45, the market appears to have a relatively modest expectations for AZZ's growth prospects. However, with analysts estimating next year's revenue growth at 4.4%, the company's strong performance and guidance suggest that it may be well-positioned to exceed these expectations. Additionally, the company's ROIC of 8.98% and ROE of 27.36% indicate a strong ability to generate returns on invested capital.

Share Buyback and M&A Pipeline

The company plans to buy back $20 million worth of shares over the next few weeks or months, demonstrating confidence in the stock's value. AZZ's M&A pipeline is strong, with nine good opportunities in various stages, which could further drive growth and expansion. The Canton acquisition contributed $1 million in revenue and a few hundred thousand dollars in contribution margin in the quarter, highlighting the company's ability to integrate and grow through acquisitions.

3. NewsRoom

AZZ (AZZ) Beats Stock Market Upswing: What Investors Need to Know

Dec -03

Source:

Ballast Asset Management LP Reduces Stock Holdings in AZZ Inc. $AZZ

Dec -01

Source: defenseworld.net

Critical Contrast: AZZ (NYSE:AZZ) versus Enersys (NYSE:ENS)

Dec -01

Source: defenseworld.net

Advantage Alpha Capital Partners LP Sells 10,655 Shares of AZZ Inc. $AZZ

Nov -28

Source: defenseworld.net

AZZ (AZZ) Rises Yet Lags Behind Market: Some Facts Worth Knowing

Nov -24

Source: zacks.com

AZZ Inc. to Participate in the Bank of America Securities Leveraged Finance Conference, and Noble Capital Markets' 21st Annual Emerging Growth Conference, and Seaport Research Partner's 3rd Annual Steel and Metals Summit in December 2025

Nov -24

Source: prnewswire.com

AZZ (AZZ) Registers a Bigger Fall Than the Market: Important Facts to Note

Nov -13

Source: zacks.com

AZZ Inc. to Participate in the Baird Global Industrials, NYSE Industrials Day, and Three Part Advisors Southwest IDEAS Conferences in November 2025

Nov -03

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.85%)

6. Segments

Precoat Metals

Expected Growth: 7%

Precoat Metals from AZZ Inc. achieves 7% growth driven by increasing demand for corrosion-resistant products in the energy and infrastructure sectors, coupled with strategic acquisitions and investments in technology, enabling the company to expand its product offerings and improve operational efficiency.

Metal Coatings

Expected Growth: 9%

AZZ Inc.'s Metal Coatings segment growth is driven by increasing demand for corrosion protection in infrastructure projects, rising adoption of renewable energy sources, and growing need for durable coatings in industrial applications. Additionally, strategic acquisitions and expansion into new markets have contributed to the 9% growth rate.

7. Detailed Products

Electrical Enclosures

AZZ Inc. provides custom and standard electrical enclosures for various industries, including industrial, commercial, and residential applications.

Metal Enclosures

The company offers custom and standard metal enclosures for electrical and electronic applications, including NEMA-rated enclosures.

Wastewater Treatment Solutions

AZZ Inc. provides wastewater treatment solutions, including corrosion protection and rehabilitation services for wastewater infrastructure.

Corrosion Protection

The company offers corrosion protection services, including coatings, linings, and cathodic protection for various industries.

Tubular Products

AZZ Inc. manufactures and supplies tubular products, including galvanized and stainless steel tubing, for various industries.

Specialty Welding

The company offers specialty welding services, including orbital welding and automated welding, for various industries.

8. AZZ Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for AZZ Inc. is moderate due to the presence of alternative products and services in the electrical equipment and components industry.

Bargaining Power Of Customers

The bargaining power of customers for AZZ Inc. is low due to the company's strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for AZZ Inc. is moderate due to the presence of multiple suppliers in the industry, but the company's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants for AZZ Inc. is low due to the high barriers to entry in the electrical equipment and components industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for AZZ Inc. is high due to the presence of several established competitors in the industry, leading to intense competition for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	58.24%
Debt Cost	10.25%
Equity Weight	41.76%
Equity Cost	10.25%
WACC	10.25%
Leverage	139.45%

11. Quality Control: AZZ Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Mueller Industries

A-Score: 6.3/10

Value: 4.5

Growth: 7.1

Quality: 7.9

Yield: 2.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

AZZ

A-Score: 6.3/10

Value: 6.7

Growth: 6.7

Quality: 6.9

Yield: 2.0

Momentum: 8.0

Volatility: 7.3

1-Year Total Return ->

Worthington Industries

A-Score: 5.0/10

Value: 3.6

Growth: 3.1

Quality: 5.7

Yield: 3.0

Momentum: 8.5

Volatility: 6.0

1-Year Total Return ->

Carpenter Technology

A-Score: 4.9/10

Value: 1.1

Growth: 7.2

Quality: 6.9

Yield: 1.0

Momentum: 9.0

Volatility: 4.0

1-Year Total Return ->

ATI

A-Score: 4.6/10

Value: 2.4

Growth: 6.8

Quality: 5.6

Yield: 0.0

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

ESAB

A-Score: 4.1/10

Value: 3.0

Growth: 4.7

Quality: 5.9

Yield: 0.0

Momentum: 5.0

Volatility: 6.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

2.17%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.25%

AZZ Inc. - US0024741045

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AZZ

1.c. Company Highlights

Strong Momentum

Higher Growth

Medium Volatility

Earnings Beats

Revenues Beats

Average Growth

Fairly Valued

Stable Momentum

Average Quality

Revenues Miss

Better Quality

2. AZZ's Q2 Results Exceed Expectations, Driven by Strong Metal Coatings Performance

Segment Performance

Guidance and Outlook

Valuation and Growth Prospects

Share Buyback and M&A Pipeline

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.85%)

6. Segments

Precoat Metals

Expected Growth: 7%

Metal Coatings

Expected Growth: 9%

7. Detailed Products

Electrical Enclosures

Metal Enclosures

Wastewater Treatment Solutions

Corrosion Protection

Tubular Products

Specialty Welding

8. AZZ Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: AZZ Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

105.15$

Current Price

105.15$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA