Shareholders might have noticed that AZZ Inc. (NYSE:AZZ) filed its annual result this time last week. The early response was not positive, with shares down 3.0% to US$73.24 in the past week. Results were roughly in line with estimates, with revenues of US$1.5b and statutory earnings per share of US$3.46. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from AZZ's four analysts is for revenues of US$1.59b in 2025. This reflects a reasonable 3.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to swell 16% to US$4.03. Before this earnings report, the analysts had been forecasting revenues of US$1.58b and earnings per share (EPS) of US$3.88 in 2025. So the consensus seems to have become somewhat more optimistic on AZZ's earnings potential following these results.
The consensus price target rose 8.5% to US$84.67, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on AZZ, with the most bullish analyst valuing it at US$89.00 and the most bearish at US$80.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that AZZ's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.4% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.5% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than AZZ.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards AZZ following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple AZZ analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for AZZ that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.