AZZ Inc (AZZ): the overlooked stock before earnings

2026-07-04 · By Lubin Danilo, founder of Lubin Investment

AZZ Inc reports first quarter results after market close on July 8, 2026. This company protects American steel from corrosion and benefits from infrastructure spending. Under my fundamental method, it scores high on quality and trades well below my reasonable buy price. Here is how I read this stock before the numbers.

Key takeaways

• AZZ Inc reports first quarter fiscal 2027 results on July 8, 2026, after market close.
• The company protects American steel and aluminum from corrosion (hot-dip galvanizing and coil coating), a business boosted by infrastructure spending and tariffs.
• My method scores it 9 out of 10 on quality, driven by a 26% free cash flow margin and controlled debt.
• The stock trades at 10.6 times free cash flow versus 18.9 times for its sector, roughly a 17% discount to my reasonable buy price.
• The one weak spot: share count grows 4.6% a year, diluting existing shareholders.

The fact: a tense release on July 8

On Wednesday, July 8, 2026, after the Wall Street close, AZZ Inc will report results for the first quarter of fiscal year 2027 (AZZ's fiscal year ends in late February, so this quarter covers March through May 2026). Analysts expect adjusted earnings per share of 1.71 dollars and revenue of 438.9 million dollars. A conference call follows the next morning.

AZZ, the invisible protector of American steel

You have probably never heard of AZZ, and that is normal: this Fort Worth, Texas company sells nothing to the public. Founded in 1956, it does a job that sounds boring but is actually vital: keeping steel and aluminum from rusting.

Its business splits into two segments. The first, AZZ Metal Coatings, is hot-dip galvanizing: a steel part is dipped into a bath of molten zinc, which forms a protective coating that lasts for decades. Utility poles, bridge beams, high-voltage transmission towers crossing the country: a good share of them went through AZZ, the leading independent provider of the service in North America. The second, AZZ Precoat Metals, applies decorative and protective coatings to steel and aluminum coil, later used in construction, appliances, HVAC, or containers.

AZZ's moat (the competitive edge that keeps rivals out) comes from two things. First, galvanizing requires heavy plants located close to customers (molten zinc does not travel well), which limits viable new entrants. Second, it is a service, not a shelf product: the customer brings the steel part, AZZ treats it and ships it back. Hard to offshore, hard to disrupt with software.

Why this matters right now

The macro wind is blowing AZZ's way. US tariffs on steel and aluminum push manufacturers to source metal made in the United States, feeding the order book of the galvanizing business. At the same time, spending on the power grid, solar, LNG terminals, and data centers is boosting demand for steel structures that need protecting. It is a double tailwind: protectionism plus an infrastructure rebound.

But there is a flip side. AZZ's other segment, Precoat Metals, depends on steel and aluminum coil from suppliers who, in turn, face tighter raw material availability because of the same tariffs. So the very tariffs boosting galvanizing put margin pressure on coil coating. It is a genuine trade-off, not a one-sided story.

What my quality score (9 out of 10) shows

On my site, every stock gets a quality score out of 10, built from objective financial criteria: sales growth, cash generation growth, profitability, debt control, shareholder dilution. AZZ scores 9 out of 10, a level very few mid-cap companies reach.

The number that struck me most: free cash flow per share (the cash generated once every bill is paid, divided by share count) grew 72.1% a year on average over the last five years. That is an extreme pace, partly because AZZ started from a low base after selling its electrical equipment division in 2022 to refocus on corrosion protection and pay down debt. But the underlying trend is real: the free cash flow margin (the share of revenue that turns into available cash) reaches 26%, and Cash ROCE, which measures the return on capital actually employed in cash terms, stands at 33.9%. For context, most industrial companies top out below 15%.

The balance sheet backs up that discipline. Net debt relative to annual free cash flow is only 1.14 times, meaning AZZ could, in theory, wipe out all its debt with a little over one year of cash generation. The company paid down 385.3 million dollars of debt over the trailing twelve months, and plans to pay down another 130 to 170 million in fiscal 2027. It also just raised its dividend by 17.6%, to 20 cents per share per quarter. That is not the behavior of a fragile business.

One caveat, to be fair: share count grows 4.63% a year, diluting every existing shareholder. It is the only criterion where AZZ misses a perfect mark in my method, which is why the score sits at 9 rather than 10.

The price: a 17% discount ahead of earnings

A good company is only a good deal if the price cooperates. To measure that, I use the P/FCF (price-to-free-cash-flow): the share price divided by the free cash flow generated each year. A P/FCF of 10 means you are paying ten years of that cash today. The lower the number, the cheaper the stock.

AZZ currently trades at 10.6 times its free cash flow. Its sector, specialty business services, carries a median valuation of 18.9 times: AZZ sits at only the 32nd percentile, meaning it is cheaper than two-thirds of comparable companies. My model, built on conservative growth assumptions, puts the reasonable buy price below 175.90 dollars. At the current price of 150.01 dollars, AZZ trades at roughly a 17.3% discount to that level. By my method, it is an undervalued stock, even before knowing the July 8 numbers.

What I am watching in the July 8 release

Three things have my attention for this release. One: do revenue and adjusted earnings beat the consensus (438.9 million dollars and 1.71 dollars per share)? Two: does management confirm full-year guidance of 1.725 to 1.775 billion dollars in sales and 6.50 to 7.00 dollars in adjusted earnings per share for fiscal 2027? Three: what tone does management strike on the balance between tariff gains in galvanizing and margin pressure in coil coating? That last, more qualitative point will tell me which way the trade-off is leaning over the coming quarters.

How I approach it

My rule never changes, whatever the stock: I judge the quality of the business first, independent of price, then check whether the current price leaves me a margin of safety. For AZZ, quality is there (9 out of 10, a balance sheet paying down debt, a rising dividend). Price sits below my reasonable buy threshold, even before knowing how the market reacts to earnings. That does not mean buying blindly ahead of a release: surprises, good or bad, can move the price by several percent within hours. But it does mean the starting point is sound.

This is exactly the kind of separation between quality and price I wanted to run in seconds for any stock, which is why I built my <a href="/screener">quality screener</a>. You can find the full, continuously updated profile at <a href="/analyse/AZZ">the AZZ Inc (AZZ) analysis</a>, and if you want to understand exactly how I build this score out of 10, I explain it all in <a href="/methodologie">my methodology</a>.

FAQ

When does AZZ Inc report quarterly earnings?

AZZ reports first quarter fiscal 2027 results on Wednesday, July 8, 2026, after market close. A conference call with analysts follows the next morning, Thursday, July 9.

What exactly does AZZ Inc do?

AZZ protects steel and aluminum from corrosion. Its historic business, hot-dip galvanizing (Metal Coatings), dips steel parts into a bath of molten zinc that protects them for decades: utility poles, bridge beams, high-voltage transmission towers. Its second business, Precoat Metals, applies coatings to steel and aluminum coil for construction, appliances, or transportation.

What exactly is P/FCF?

P/FCF (price-to-free-cash-flow) compares the share price to the cash a company actually generates each year, once every bill is paid. A P/FCF of 10 means you are paying ten years of that cash today. The lower it is, the cheaper the stock, quality held equal.

Is AZZ Inc an undervalued stock?

By my method, yes: it trades at 10.6 times free cash flow versus a sector median of 18.9 times, and its current price sits roughly 17% below my reasonable buy price. But a low price is only worth it if the quality holds up, which appears to be the case here with a score of 9 out of 10. This is not personalized investment advice.

Do steel tariffs help or hurt AZZ?

Both, and that is the real debate here. They boost demand for the galvanizing business by pushing manufacturers to buy American steel, but they also tighten the availability of the steel and aluminum coil used by its other business, Precoat Metals, pressuring its margins. It is something I watch in every quarterly release.

Voir l'analyse AZZ sur Lubin Investment

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).