Bullish stock to watch: AZZ Inc (NYSE: AZZ)

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AZZ Inc (NYSE: AZZ) stock rose over 4.02% on 9th January, 2020 (Source: Google finance) after the company posted better than expected results for the third quarter of FY 20. Net income for the quarter improved to $22 million, from $15.4 million in the same period a year ago, which represents the growth of 43%. Energy segment had a strong fall turnaround season, continued shipping the Chinese high-voltage bus orders. The company’s bookings in the third quarter increased 25% to $264 million year-over-year, on the back of improving market conditions in welding solutions, electrical enclosures and domestic high-voltage bus. In the Energy segment, the strong third quarter bookings were of $134 million, which is an increase of 32% versus last year. The Metal Coatings segment experienced increase  in demand in the solar and petrochemical markets and contribution from the acquisitions completed earlier this year resulted in improved volumes across most of the regions.

AZZ in the third quarter of FY 20 has reported the adjusted earnings per share of 84 cents, beating the analysts’ estimates for the adjusted earnings per share of 80 cents. The company had reported the adjusted revenue growth of 21.6 percent to $291.1 million in the third quarter of FY 20, beating the analysts’ estimates for revenue of $271.1 million. The sales grew due to metal coatings revenue growth of 20.2% to $129.2 million and energy revenue rose 22.7% to $161.9 million. Operating margins in the metal coatings business has improved to 21.1% from 17.0%, on the back of lower zinc costs and the energy business got a boost from a “very active fall turnaround season.” EBITDA for Q3 fiscal 2020 rose 34.4% to $46.8 million compared to the third quarter fiscal year 2019.

The company has reaffirmed the previous issued guidance for fiscal 2020 with earnings per share expected to be in the range of $2.60 to $2.90 per diluted share, and revenues is expected to be in the range of $1.02 to $1.06 billion. For the year-to-date, cash flow from operations grew by $14 million in fiscal 2020 compared to the prior year on the back of higher net income, which was offset slightly by higher working capital year-to-date. The company continues to invest in the business in the third quarter with one acquisition now operating as part of the Metal Coatings segment and is expected to be accretive to the segment this year.

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