Tuesday, NYSE:AZZ (NYSE:AZZ) saw its stock price target increased to $85 from $67 while maintaining its Buy rating by B.Riley, following the company's release of its fourth fiscal quarter adjusted EBITDA, which surpassed both the firm's and consensus estimates.
AZZ Inc . reported an adjusted EBITDA of $73.9 million yesterday, ahead of the projected figures of $68.6 million by B.Riley and $68.7 million by consensus.
The company's consistent performance since August 2023 has been attributed to cost-improvement and productivity initiatives, particularly within Precoat Metals, and higher pricing in the Metal Coatings segment.
AZZ's strategic measures have led to a significant debt reduction, with $115 million paid down in fiscal year 2024. This repayment has brought the company's leverage ratio within its targeted range, posting a 2.9x last twelve months (LTM) EBITDA at quarter's end.
Looking ahead, AZZ anticipates further debt reduction, projecting a paydown of $60 million to $90 million in fiscal year 2025. Having met its leverage goals, the company is now poised to explore acquisition opportunities, with a focus on bolt-on acquisitions in the Metal Coatings segment.
The optimism surrounding AZZ is based on several factors, including the company's extensive presence across key manufacturing regions, its ongoing debt reduction strategy, its involvement in a broad spectrum of infrastructure projects and government funding, and its approach of prioritizing value over volume, which has been yielding sustainable cash flow.
These elements contribute to B.Riley's continued endorsement of AZZ with a Buy rating and an elevated price target.
InvestingPro Insights
Following the positive outlook from B.Riley, real-time data from InvestingPro supports the bullish sentiment surrounding AZZ Inc. The company's market capitalization stands at a robust $1.92 billion, reflecting investor confidence.
A notable P/E ratio of 21.62 suggests that the market values AZZ's earnings growth prospects, while an impressive price total return of 95.96% over the last year underscores the stock's strong performance. Moreover, AZZ has demonstrated a commitment to shareholder returns, maintaining dividend payments for 15 consecutive years, with a current yield of 0.89%.
InvestingPro Tips further highlight the company's strengths, such as an expected increase in net income and profitability over the last twelve months. Moreover, AZZ's liquid assets surpassing short-term obligations indicate a solid financial position, which aligns with the company's strategic debt reduction narrative outlined in the article. With analysts predicting profitability this year and a large price uptick over the last six months, the company's growth trajectory appears to be on a firm footing.
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