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    Rising Free Cash Flow And Efficiency Might Change The Case For Investing In AZZ (AZZ)

    Simply Wall St·12/23/2025 16:07:18
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    • In recent coverage, AZZ Inc. was highlighted for its efficient business model, including an operating margin around 15% and strong operating leverage that has boosted profitability over the past five years.
    • An especially interesting detail is the sharp improvement in AZZ’s free cash flow margin, giving the company more flexibility to fund investments or return capital to shareholders.
    • With this backdrop of rising free cash flow and efficiency gains, we’ll now examine how the latest news shapes AZZ’s broader investment narrative.

    Find companies with promising cash flow potential yet trading below their fair value.

    AZZ Investment Narrative Recap

    To own AZZ, you need to believe its efficient, high-margin galvanizing and coil coating model can keep turning strong free cash flow into durable earnings, even as growth expectations cool. The latest attention from Zacks and a Rank #4 (Sell) rating does not materially change the near term focus on execution at new facilities as a key catalyst, or the ongoing risk that weather or input cost volatility could pressure margins.

    Against this backdrop, AZZ’s recent 17.6% dividend increase to US$0.20 per share stands out, as it aligns with the story of rising free cash flow and balance sheet improvement. For investors watching catalysts, this mix of higher shareholder returns, lower interest costs from the repriced US$434.9 million Term Loan B, and a new US$150 million receivables facility all tie back to one question: how consistently AZZ can translate operating leverage into reliable cash generation.

    Yet, for all this progress, the ramp up risk at newer facilities is something investors should be aware of...

    Read the full narrative on AZZ (it's free!)

    AZZ's narrative projects $1.8 billion revenue and $195.5 million earnings by 2028. This requires 5.0% yearly revenue growth and a $64.6 million earnings decrease from $260.1 million today.

    Uncover how AZZ's forecasts yield a $125.89 fair value, a 15% upside to its current price.

    Exploring Other Perspectives

    AZZ 1-Year Stock Price Chart
    AZZ 1-Year Stock Price Chart

    Two fair value estimates from the Simply Wall St Community span roughly US$109 to US$126 per share, showing how far apart individual views can be. Against that backdrop, the focus on AZZ’s execution at new facilities becomes even more important as you weigh how these differing expectations might play out in the company’s future performance.

    Explore 2 other fair value estimates on AZZ - why the stock might be worth just $109.41!

    Build Your Own AZZ Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

    • A great starting point for your AZZ research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
    • Our free AZZ research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AZZ's overall financial health at a glance.

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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.