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.

Show Full description

1.b. Last Insights on AZZ

AZZ Inc.'s recent performance was driven by stronger-than-expected earnings, with total sales up 5.5% to $425.7 million and net income rising 22.2% to $41.1 million. The Metal Coatings segment saw significant growth, with sales up 15.7% to $195.0 million. The company also repurchased 201,416 shares, reducing outstanding shares and increasing shareholder value. Additionally, AZZ's infrastructure projects and tailwinds in industries using its materials have lifted its outlook. Its valuation disconnect presents a buying opportunity.

1.c. Company Highlights

Last Price	127.58
Change Percentage	-0.10%
Open	128.57
Previous Close	127.71
Market Cap ( Millions)	3835
Volume	155707
Year High	130.69
Year Low	70.9
M A 50	112.56
M A 200	104.24

FCF Yield	11.17%
Dividend Yield	0.58%
ROE	26.34%
Debt / Equity	42.95%
Net Debt / EBIDTA	99.01%
Price To Book	2.9
Price Earnings Ratio	11.89
Price To FCF	8.95
Price To sales	2.37
EV / EBITDA	7.7

2. AZZ Inc. Posts Record Sales, Driven by Metal Coatings Growth

AZZ Inc. reported record sales of $426 million in the third quarter of fiscal 2026, a 5.5% increase from the prior year period. The growth was primarily driven by the Metal Coatings segment, which saw sales rise 15.7% year-over-year, fueled by higher volumes and strong demand from infrastructure projects. Adjusted EBITDA was $91.2 million, or 21.4% of sales. The company's actual EPS came out at $1.52, beating estimates of $1.43. The company maintained its cash dividend of $0.20 per share, marking 63 consecutive quarters of consistently returning capital to shareholders.

Publication Date: Jan -09

                                    📋 Highlights
                                    Record Q3 Sales Growth::
                                                AZZ Inc. achieved $426M in sales, a 5.5% YoY increase, with Metal Coatings segment up 15.7% driven by infrastructure demand and 30.3% EBITDA margins.
Precoat Segment Recovery::
                                                Sales declined 1.8% YoY, but sequential improvement noted, with reduced prepainted metal imports down 35% in 2026 creating market opportunities.
Strong Cash Flow and Shareholder Returns::
                                                Generated $79.7M in operating cash flow, repurchased $20M in stock, and maintained a 63-quarter consecutive dividend of $0.20/share.
Narrowed Fiscal 2026 Guidance::
                                                Projects $1.625B–$1.7B sales, $360M–$380M adjusted EBITDA (21.4% margin), and $5.90–$6.20 diluted EPS.
M&A and Margin Strategy::
                                                CEO highlighted disciplined pricing in Metal Coatings, margin-optimized growth, and a strong M&A pipeline targeting bolt-on acquisitions.

                                

Segment Performance

The Metal Coatings segment saw EBITDA margins at 30.3%, despite a slight decrease in gross margins due to the company chasing larger projects with marginally lower margins. According to Thomas Ferguson, CEO of AZZ Inc., the team has demonstrated discipline in pricing projects. The Precoat Metals segment saw sales decline 1.8% year-over-year, but Ferguson implied that the segment has bottomed, with a positive outlook due to reduced prepainted metal imports.

Outlook and Guidance

AZZ narrowed its forecast ranges for total sales, EBITDA, and adjusted EPS, anticipating sales of $1.625 billion to $1.7 billion, adjusted EBITDA of $360 million to $380 million, and adjusted diluted earnings per share of $5.90 to $6.20. Analysts estimate next year's revenue growth at 5.5%. The company will release fiscal 2027 guidance in the next few weeks.

Valuation and Return Metrics

The company's current P/E Ratio is 10.91, and EV/EBITDA is 6.45, indicating a relatively reasonable valuation. The company's ROE is 26.34%, and ROIC is 9.45%, suggesting efficient use of capital. The dividend yield is 0.63%, and the free cash flow yield is 12.18%, indicating a decent return for shareholders.

Strategic Focus

Ferguson expressed enthusiasm about the company's position and leadership team's focus, citing a strong M&A pipeline with a preference for bolt-on acquisitions. The company has been actively reducing debt and repurchasing shares, with plans to review its dividend policy annually.

3. NewsRoom

AZZ Inc. Announces New Share Repurchase Program

Jan -30

Source: prnewswire.com

AZZ Inc. to Participate in the Noble Virtual Equity Conference & The Barclay's Industrial Select Conference in February 2026

Jan -28

Source: prnewswire.com

Tara Mackey Sells 2,790 Shares of AZZ (NYSE:AZZ) Stock

Jan -24

Source: defenseworld.net

Maryland State Retirement & Pension System Has $471,000 Position in AZZ Inc. $AZZ

Jan -24

Source: defenseworld.net

AZZ Inc. $AZZ Stake Lessened by Asset Management One Co. Ltd.

Jan -09

Source: defenseworld.net

Overlooked Stock: AZZ Hits 52-Week High After Earnings

Jan -08

Source: youtube.com

AZZ Inc. (AZZ) Q3 2026 Earnings Call Transcript

Jan -08

Source: seekingalpha.com

TD Synnex, Constellation Brands And 3 Stocks To Watch Heading Into Thursday

Jan -08

Source: feeds.benzinga.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: 6.4/10

Value: 4.3

Growth: 7.1

Quality: 7.9

Yield: 2.0

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

AZZ

A-Score: 6.1/10

Value: 6.8

Growth: 6.8

Quality: 6.7

Yield: 2.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

Worthington Industries

A-Score: 5.3/10

Value: 3.9

Growth: 3.1

Quality: 5.9

Yield: 4.0

Momentum: 8.5

Volatility: 6.3

1-Year Total Return ->

Carpenter Technology

A-Score: 5.0/10

Value: 1.2

Growth: 7.3

Quality: 6.9

Yield: 1.0

Momentum: 9.5

Volatility: 4.0

1-Year Total Return ->

ATI

A-Score: 4.7/10

Value: 1.6

Growth: 6.6

Quality: 5.8

Yield: 0.0

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

ESAB

A-Score: 3.9/10

Value: 3.1

Growth: 4.7

Quality: 5.9

Yield: 0.0

Momentum: 3.5

Volatility: 6.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.13%

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

Earnings Miss

2. AZZ Inc. Posts Record Sales, Driven by Metal Coatings Growth

Segment Performance

Outlook and Guidance

Valuation and Return Metrics

Strategic Focus

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

127.58$

Current Price

127.58$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA