On Wednesday, B.Riley updated its outlook on AZZ Inc . (NYSE: NYSE:AZZ), raising the price target to $99 from the previous $89, while maintaining a Buy rating on the stock. The adjustment follows AZZ's announcement last Tuesday of a significant earnings outperformance for the first quarter.
AZZ reported fiscal first-quarter adjusted EBITDA of $94.1 million, surpassing both B.Riley's projection of $82.3 million and the FactSet consensus of $89.7 million. This marks the fourth successive quarter that the company has exceeded quarterly EBITDA estimates since B.Riley began covering the stock in August 2023.
The company's strong start to the year is attributed particularly to its Metal Coatings segment. AZZ Inc. has indicated that it will reassess its full-year guidance following the summer construction season. Meanwhile, the company is assessing potential acquisition targets, which are described as bolt-on in nature. However, management has signaled no immediate plans to pursue these acquisitions.
In addition to exploring growth through acquisitions, AZZ is committed to reducing its debt and successfully completing its growth project within the set timeline and budget. The raised price target to $99 reflects the robust performance of the Metal Coatings segment and the application of a slightly higher multiple.
In other recent news, AZZ Inc. reported a record-breaking quarterly revenue of $413 million for the first quarter of the fiscal year 2025. This significant increase in revenue was driven by substantial profitability growth in both its Metal Coatings and Precoat Metals segments, as well as expanded EBITDA margins.
The company has also made strides in reducing its debt and investing in growth, with plans to operationalize a new aluminum coil coating facility in Washington, Missouri, by early 2025.
Moreover, AZZ completed a secondary public offering, raising $308.7 million to fully redeem Series A preferred stock. The company maintains a strong financial position with a $400 million revolver and no debt maturities until 2027. For fiscal 2025, AZZ reaffirms its sales guidance of $1.525 billion to $1.625 billion and adjusted EBITDA of $310 million to $360 million.
Despite the slower than anticipated conversion process from post-paint to pre-paint in the steel and aluminum sectors, the company remains optimistic about the strength in end markets, including construction, bridge and highway, and renewables.
As part of its ongoing business strategy, AZZ is also exploring additional contracts for the output of the new facility in Washington, Missouri. These are some of the latest developments in the company's operations.
InvestingPro Insights
Following B.Riley's updated outlook on AZZ Inc. (NYSE: AZZ), the InvestingPro platform offers additional insights into the company's financial health and market performance. AZZ is currently trading at a high earnings multiple with a P/E ratio of 86.54, which indicates a premium valuation relative to the market. However, this is aligned with the company's significant return over the last week, with a 1 Week Price Total Return of 13.38%. Additionally, AZZ's liquid assets surpass its short-term obligations, providing financial stability and flexibility.
InvestingPro Tips suggest that AZZ has been profitable over the last twelve months and analysts predict the company will continue to be profitable this year. This optimism is reflected in the company's stock trading near its 52-week high, at 99.78% of the peak price. Moreover, AZZ has shown a strong return over the last five years, reinforcing the potential for long-term investment growth. For more detailed analysis and additional tips, interested investors can visit https://www.investing.com/pro/AZZ, and with the coupon code PRONEWS24, they can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 11 more InvestingPro Tips available, offering a comprehensive view of AZZ's market position and future prospects.
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