Assessing AZZ Inc’s (NYSE:AZZ) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess AZZ’s recent performance announced on 31 May 2018 and evaluate these figures to its long-term trend and industry movements.
Was AZZ’s recent earnings decline indicative of a tough track record?
AZZ’s trailing twelve-month earnings (from 31 May 2018) of US$49m has declined by -4.5% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -4.3%, indicating the rate at which AZZ is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, AZZ has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 5.9% is below the US Electrical industry of 6.9%, indicating AZZ’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for AZZ’s debt level, has declined over the past 3 years from 11% to 4.0%.
What does this mean?
AZZ’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Typically companies that experience a drawn out period of diminishing earnings are undergoing some sort of reinvestment phase in order to keep up with the latest industry growth and disruption. You should continue to research AZZ to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AZZ’s future growth? Take a look at our free research report of analyst consensus for AZZ’s outlook.
- Financial Health: Are AZZ’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 May 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.