AZZ Inc. (NYSE:AZZ) just released its third-quarter report and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 7.3% to hit US$291m. Statutory earnings per share (EPS) came in at US$0.84, some 5.7% above what analysts had expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the twin analysts covering AZZ are now predicting revenues of US$1.06b in 2021. If met, this would reflect a modest 4.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to expand 18% to US$3.06. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.06b and earnings per share (EPS) of US$3.06 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 5.7% to US$55.50. It looks as though analysts previously had some doubts over whether the business would live up to their expectations.
It can also be useful to step back and take a broader view of how analyst forecasts compare to AZZ's performance in recent years. It's clear from the latest estimates that AZZ's rate of growth is expected to accelerate meaningfully, with forecast 4.3% revenue growth noticeably faster than its historical growth of 2.7%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 3.1% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect AZZ to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that AZZ's revenues are expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for AZZ going out as far as 2023, and you can see them free on our platform here.
You can also view our analysis of AZZ's balance sheet, and whether we think AZZ is carrying too much debt, for free on our platform here.
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