AZZ, Inc. (AZZ) provides metal coating solutions, welding solutions, electrical equipment, and engineered services. This week, AZZ delivered better-than-expected earnings for the second quarter of Fiscal 2022 while also boosting its full-year guidance.
Let us have a look at AZZ’s financials as well as what has changed in its key risk factors that investors should know.
Revenue increased 6.4% year-over-year to $216.4 million but fell short of analysts’ expectations by $1.2 million. While sales from the Infrastructure Solutions segment remained essentially flat at $86.9 million, top-line growth came from a 10.7% growth in the Metal Coatings segment’s sales to $129.6 million.
AZZ’s booking for the quarter increased to $231.8 million from $208.6 million a year ago. Significantly, the book-to-sales ratio improved to 1.07 from 1.03 a year ago. Earnings per share of $0.76 beat consensus estimates by $0.11. AZZ generated earnings per share of $0.49 in the comparable period a year ago. (See Insiders’ Hot Stocks on TipRanks)
Furthermore, buoyed by its segmental operating performance, AZZ revised its previous Fiscal 2022 guidance upwards. It now expects sales to be in the range of $865 million to $925 million and earnings per share to land between $2.90 and $3.20 per share.
Previously, AZZ expected sales of $855 million to $935 million and earnings per share of $2.65 to $3.05 per share.
Tom Ferguson, President and CEO of AZZ said, “For the remainder of fiscal 2022, we remain highly focused on growing our Metal Coatings segment while focusing our Infrastructure Solutions team on continuing to improve profitability.”
In July, Stifel Nicolaus analyst Noelle Dilts reiterated a Buy rating on the stock and increased the price target to $62 from $59, implying upside potential upside of 11.8%.
Dilts believes AZZ’s focus on the higher-margin coatings business will maximize value for investors. The analyst also expects AZZ to benefit from an infrastructure stimulus package.
AZZ scores an 8 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform the broader market.
Now, let’s have a look at what’s changed in the company’s key risk factor profile.
According to the new Tipranks Risk Factors tool, AZZ’s main risk category is Finance & Corporate, accounting for 24% of the total 38 risks identified. In the recent Q2 report, the company added one key risk factor under the Macro & Political risk category.
AZZ highlighted that its business and operations may be negatively impacted by the COVID-19 pandemic. There is uncertainty regarding the duration and severity of the pandemic, its newly identified variants, and its possible effects on AZZ’s supply chain.
Moreover, AZZ also noted that the proposed regulation requiring employers with over 100 employees to ensure that all employees are fully vaccinated, or to verify that an unvaccinated workforce receives a negative test at least once a week, may result in attrition, difficulty in fulfilling future workforce requirements, and may also impact AZZ’s future profit margins.
Compared to a Macro & Political sector average risk factor of 14%, AZZ’s is at 21%. Shares are up 58.6% over the past year.
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