Azz Inc (NYSE: AZZ)

Sector: Industrials Industry: Specialty Business Services CIK: 0000008947
Market Cap 3.36 Bn
P/B 15.79
P/E 80.29
P/S 8.39
ROIC (Qtr) 9.68
Div Yield % 0.15
Rev 1y % (Qtr) 5.47
Total Debt (Qtr) 566.61 Mn
Debt/Equity (Qtr) 0.43
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About

AZZ Inc., known by its stock symbol AZZ, is a prominent player in the provision of hot-dip galvanizing and coil coating solutions, primarily serving North American markets. Established in 1956 and headquartered in Fort Worth, Texas, AZZ conducts its operations through three segments: AZZ Metal Coatings, AZZ Precoat Metals, and AZZ Infrastructure Solutions. AZZ Metal Coatings is a leading entity in the metal finishing industry, specializing in corrosion protection solutions. These include hot-dip galvanizing, spin galvanizing, powder coating, anodizing,...

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Investment thesis

Bull case

  • Strong operating cash flow of 517.18M provides robust 0.91x coverage of total debt 566.61M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 517.18M provides strong 37.16x coverage of stock compensation 13.92M, indicating sustainable incentive practices.
  • Strong operating cash flow of 517.18M provides 3.74x coverage of SG&A expenses 138.16M, showing efficient operational cost management.
  • Robust free cash flow of 432.44M exceeds capital expenditure of 84.74M by 5.10x, indicating strong organic growth funding capability.
  • Retained earnings of 873.59M provide full 1.57x coverage of long-term debt 557.11M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 517.18M barely covers its investment activities of (114.89M), with a coverage ratio of -4.50, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 623000 against inventory of 107.48M, the 0.01 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 517.18M provides thin coverage of dividend payments of (22.18M) with a -23.31 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 623000 provide limited coverage of acquisition spending of (30.14M), which is -0.02x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 432.44M represents just -1.20x of debt issuance (358.93M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2025)

Customer Breakdown of Revenue (2025)

Peer comparison

Companies in the Specialty Business Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CTAS Cintas Corp 120.08 Bn 556.91 33.85 3.24 Bn
2 RELX Relx Plc 56.19 Bn 20.01 4.34 9.82 Bn
3 TRI Thomson Reuters Corp /Can/ 37.42 Bn 24.91 5.00 2.44 Bn
4 CPRT Copart Inc 36.25 Bn 22.74 7.79 0.10 Bn
5 RBA Rb Global Inc. 19.20 Bn 49.09 4.24 4.21 Bn
6 ULS UL Solutions Inc. 14.12 Bn 43.32 4.92 0.74 Bn
7 GPN Global Payments Inc 11.52 Bn 284.78 8.66 16.20 Bn
8 ARMK Aramark 10.37 Bn 32.72 0.55 6.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.52 2.48
EV to Cash from Ops. EV/CFO 40.21 30.22
EV to Debt EV to Debt 6.00 31.08
EV to EBIT EV/EBIT 46.17 94.66
EV to EBITDA EV/EBITDA 38.01 18.37
EV to Free Cash Flow [EV/FCF] EV/FCF 50.23 -20.73
EV to Market Cap EV to Market Cap 1.01 178.66
EV to Revenue EV/Rev 8.50 8.12
Price to Book Value [P/B] P/B 15.79 5.37
Price to Earnings [P/E] P/E 80.29 65.19
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 14.49 -15,800.59
Dividend Payout Ratio % Div Payout % (Qtr) 6.90 10.14
Dividend per Basic Share Div per Share (Qtr) 0.74 0.35
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 5.13 7.65
Interest Coverage Int. cover (Qtr) 7.83 30.46
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 25.21 -178.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -58.02 155.14
Dividend Growth (1y) % Div 1y % (Qtr) 8.82 5.38
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 90.11 -34.92
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 4.92 -86.28
EBIT Growth (1y) % EBIT 1y % (Qtr) 89.79 -22.62
EBT Growth (1y) % EBT 1y % (Qtr) 153.77 -287.35
EPS Growth (1y) % EPS 1y % (Qtr) 615.33 -118.47
FCF Growth (1y) % FCF 1y % (Qtr) 218.38 -146.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.28 2.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.72 0.84
Cash Payout Ratio Cash Payout (Qtr) 0.04 -0.03
Cash Ratio Cash Ratio (Qtr) 0.00 1.15
Current Ratio Curr Ratio (Qtr) 1.66 4.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 0.92
Interest Cover Ratio Int Coverage (Qtr) 7.83 30.46
Times Interest Earned Times Interest Earned (Qtr) 7.83 30.46
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 35.40 -33.89
EBIT Margin % EBIT Margin % (Qtr) 29.93 -43.32
EBT Margin % EBT Margin % (Qtr) 26.10 -44.88
Gross Margin % Gross Margin % (Qtr) 23.90 39.81
Net Profit Margin % Net Margin % (Qtr) 19.90 -41.60