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AZZ

AZZ
45
Manufacturing - Metal Fabrication · Industrials
Price
$147.21
-3.93 (-2.60%)
Market Cap
$4.42B
Winston Score
45
Winston is serious
Mixed quality — meaningful strengths and weaknesses.

Share count rising — dilution

+20.5% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 25.1M (2022) → 30.2M (2026)

AZZ Inc. is an industrial company that protects metal from rust and corrosion. Its main business is hot-dip galvanizing, a process where steel parts are dipped in molten zinc to make them last longer. Customers include construction companies, utilities, and manufacturers who need steel structures, pipes, and hardware to hold up outdoors for decades.

AZZ earns revenue by charging customers a fee to galvanize their steel parts, and it also sells metal coil coating services to manufacturers who need pre-painted or treated metal rolls. The company operates mostly in the United States, with over 40 galvanizing plants spread across North America, giving it a geographic scale that smaller competitors struggle to match. Its main growth driver is infrastructure spending, since roads, bridges, and utility projects all require galvanized steel — but rising zinc prices and debt from recent acquisitions remain key risks to watch.

Winston Score History

Score breakdown

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Quality

Gross Margin
22.7%
Thin — 22.7% gross margin
Operating Margin
14.8%
Healthy — 14.8% operating margin
ROCE
3.1%
Weak — 3.1% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY
-1.3%
Shrinking sales (-1.3% YoY)
EPS YoY
-35.4%
Earnings shrinking (-35.4% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency
6/8 quarters
Earnings grew in most of the last 8 quarters

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Cash Flow

Cash Conversion
165%
Turns 165% of profit into real cash
FCF Margin
11.7%
Modest free cash flow (11.7%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity
0.36
Conservative — low debt load (0.36)
Interest Cover
4.32x
Adequate interest coverage (4.3x)

Interest coverage between 3 and 8. Profits cover interest several times over.

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Valuation

P/E Ratio (TTM)
26.5x
Growth-priced — P/E 26.5

P/E above the market average. People are paying up for expected growth.

P/E vs Forward
+9.0
GROWING
Earnings expected to grow meaningfully — cheaper on forward P/E (26.5 → 17.5)

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Dividends

Dividend Yield
0.57%
Small dividend — 0.57% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth
+18.3%
Dividend growing fast (18.3% YoY)

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