What a time it’s been for AZZ. In the past six months alone, the company’s stock price has increased by a massive 48.3%, reaching $146.23 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is it too late to buy AZZ? Find out in our full research report, it’s free.
Why Are We Positive On AZZ?
Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, AZZ’s sales grew at an exceptional 14.5% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
AZZ’s EPS grew at 23.9% compounded annual growth rate over the last five years, higher than its 14.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, AZZ’s margin expanded by 23 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat. AZZ’s free cash flow margin for the trailing 12 months was 26.9%.
Final Judgment
These are just a few reasons why we think AZZ is a great business, and with the recent rally, the stock trades at 21.1× forward P/E (or $146.23 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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