AZZ · AZZ
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $152.96
Note written ·
Price against the kill line
12.7% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $152.96, on record since 11 November 2026. The shares are down 12.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $152.96, which is above the August closes near $150 and would show the shares leading the S&P 500 again. A third-quarter report above the top of the $7.00–7.30 adjusted earnings guide, or a raised fiscal 2027 outlook, would also show that.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Industrials
Quarter to 31 August 2026, filed 13 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 487
- Revenue, change on a year (%)
- +16.7
- Gross margin (%)
- 25.1
- Operating margin (%)
- 17.2
- Free cash flow, four quarters ($M)
- 214
- Net cash, cash less debt ($M)
- −467
- Price to earnings (×)
- 23.9
- Enterprise value to sales (×)
- 2.6
All filed numbers
What AZZ reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 487 | +16.7 | 25.1 | 17.2 |
| first filed | 449 | +6.3 | 25.0 | 17.2 |
| first filed | 385 | +9.4 | 22.7 | 14.8 |
| first filed | 426 | +5.5 | 23.9 | 16.3 |
| first filed | 417 | +2.0 | 24.3 | 16.4 |
| first filed | 422 | +2.1 | 24.7 | 16.5 |
| Pre-tax income ($M) | 79.8 |
| Net income ($M) four quarters: 168 | 58.5 |
| Diluted shares, change on a year (%) against the quarter to 31 August 2025 | −0.4 |
| Operating cash flow ($M) | 292 |
| Capital spending ($M) | 77.8 |
| Free cash flow ($M) | 214 |
| Cash and short-term investments ($M) | 2.0 |
| Debt ($M) non-current long-term debt | 469 |
| Net cash, cash less debt ($M) | −467 |
| Deferred revenue ($M) −14.3% on a year | 0.6 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 179 |
| Inventory ($M) | 134 |
| Shareholders' equity ($M) | 1,415 |
| Market value ($M) | 3,998 |
| Enterprise value, market value plus net debt ($M) | 4,464 |
| Enterprise value to sales (×) | 2.6 |
| Enterprise value to operating income (×) | 15.5 |
| Price to earnings (×) | 23.9 |
| Price to book value (×) | 2.8 |
| Free-cash-flow yield (%) | 5.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.8% of shares outstanding sold short, 3.0 days of average trading to cover, +1.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $5.3M |
The thesis
AZZ Inc.'s galvanizing-led earnings recovery is real, but the shares are more likely to lag the S&P 500 over the next three months: they closed at $132.49 on 11 November 2026, under both their 50-day and 200-day averages. The fiscal third-quarter report, expected around 7 January 2027, decides whether the raised guidance holds.
AZZ reported second-quarter sales of $486.9 million, up 16.7%, and adjusted earnings of $2.00 per share against a $1.85 estimate, in its 13 October 2026 release. It raised fiscal 2027 adjusted earnings guidance to $7.00–7.30 per share from $6.75–7.15, and sales guidance to $1.825–1.875 billion.
The shares have not followed the results. They closed at $132.23 on 4 November 2026, fell to $122.22 on 5 November 2026 and recovered to $132.49 by 11 November 2026. The three-month price change is −11.7%, and the last close is 18.3% below the 52-week intraday high of $162.20 set on 25 June 2026. Company news since the report is limited to a sustainability report on 6 November 2026 and an investor-conference schedule issued 26 October 2026, and neither explains the decline.
Bullish and bearish views on AZZ Inc.
The bull case on AZZ Inc. (AZZ), in brief: galvanizing growth accelerated. The bear case: shares trail both moving averages.
Bull case
- Galvanizing growth accelerated. Metal Coatings sales rose 22.9% to $233.5 million in the second quarter, against 12.3% in the first. The adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin was 30.7%, up from 30.3%.
- Precoat Metals improved. Sales rose 11.5% to $253.4 million, against 1.5% in the first quarter. The adjusted EBITDA margin rose 100 basis points to 21.2%.
- Consolidated margin widened. Adjusted EBITDA was $110.9 million, or 22.8% of sales, against $88.7 million, or 21.3%, a year earlier, per the 13 October 2026 release.
- Guidance topped estimates. The $7.00–7.30 adjusted earnings range compares with a $7.07 estimate, per Benzinga on 13 October 2026.
- Analyst targets sit above the price. On 15 October 2026 B. Riley kept a Buy rating with a $174 target. Barclays and Wells Fargo raised targets to $145 on Equal-Weight ratings, and Baird kept Neutral with a $150 target.
Bear case
- Shares trail both moving averages. The close of $132.49 on 11 November 2026 is under the 50-day average of $135.08 and the 200-day average of $138.09, both adjusted. A recovery that results and guidance support has not shown up in the price.
- Capacity is not full. One analyst noted after the report that galvanizing fleet utilization is only 60% to 70%. Growth depends on filling new and upgraded plants.
- Precoat end markets are soft. The CFO said heating, ventilation and air conditioning and appliance demand fell a combined 10% in the second quarter.
- Reported earnings fell. Simply Wall St reported on 15 October 2026 that net income excluding extra items fell about 34.6% to $58.5 million.
- A senior operator sold shares. An SEC Form 4 filed for 14 August 2026 shows Bryan Stovall, chief operating officer of Metal Coatings, sold 2,677 shares at $150.07 in the open market.
Price setup
The last close was $132.49 on 11 November 2026, after closes of $132.82 on 9 November 2026 and $130.81 on 10 November 2026. The 50-day average is $135.08 and the 200-day average is $138.09, so the shares sit under both. The 52-week intraday high is $162.20 (25 June 2026).
The market has priced in part of the guidance but not all of it: the shares closed 18.3% below that high on 11 November 2026, five weeks after a raise.
The fiscal third quarter ends on 30 November 2026, so no earnings date falls inside the next 30 days. The only investor-facing events before then are two November conferences, listed under the catalysts.
Catalysts ahead
- 17 November 2026: NYSE Industrials Day virtual conference. An investor-facing appearance where guidance of $7.00–7.30 adjusted earnings per share can be restated or qualified.
- 18 November 2026: Three Part Advisors Southwest IDEAS Conference in Dallas, with a webcast. Another chance for management to address galvanizing and Precoat demand trends that the shares may be questioning.
- ~7 January 2027 (est.): AZZ fiscal 2027 third-quarter results (date unconfirmed; the fiscal 2026 third-quarter release came on 7 January 2026). Shows whether Metal Coatings holds a margin near 30% and whether the raised guidance survives a seasonally softer stretch.
What would change the view
A daily close above $152.96, which is above the August closes near $150 and would show the shares leading the S&P 500 again. A third-quarter report above the top of the $7.00–7.30 adjusted earnings guide, or a raised fiscal 2027 outlook, would also show that.
What it trades with
AZZ trades with US industrial and construction-linked cyclicals. Galvanizing volume follows infrastructure, utility and commercial building activity. Precoat Metals follows appliance, heating, ventilation and air conditioning demand. The sale of the Electrical Products Group to nVent on 1 May 2025 left AZZ as a coatings business, so its results depend on industrial volume and on zinc and energy costs more than on electrical equipment demand.
The evidence, claim by claim (6)
- AZZ reported fiscal 2027 second-quarter sales of $486.9 million, up 16.7%, and adjusted diluted earnings of $2.00 per share against a $1.85 estimate. AZZ fiscal 2027 second-quarter results release; Benzinga · as of
- AZZ raised fiscal 2027 guidance to sales of $1.825–1.875 billion, adjusted EBITDA of $380–420 million and adjusted earnings of $7.00–7.30 per share (prior range $6.75–7.15). AZZ fiscal 2027 second-quarter results release · as of
- Second-quarter Metal Coatings sales rose 22.9% to $233.5 million with a 30.7% adjusted EBITDA margin; Precoat Metals sales rose 11.5% to $253.4 million at a 21.2% margin. AZZ fiscal 2027 second-quarter results release · as of
- Bryan Stovall, COO of Metal Coatings, sold 2,677 shares in the open market at $150.07. SEC Form 4 filed for 14 August 2026 · as of
- The shares closed at $132.49 on 11 November 2026, below the 50-day average of $135.08 and the 200-day average of $138.09, with a three-month price change of −11.7%. Split- and dividend-adjusted daily closes · as of
- AZZ listed four November 2026 investor events: a Sidoti roadshow on 11-03, the Baird Global Industrials Conference (presentation 11-10), NYSE Industrials Day on 11-17 and the Southwest IDEAS Conference on 11-18. AZZ press release 26 October 2026, via Kalkine · as of
Sources
- AZZ Inc plans four November 2026 investor events · kalkine.com
- Finviz
- Analyst Ratings for AZZ Inc. (AZZ) · streetinsider.com
- AZZ Inc. to Review Third Quarter Fiscal Year 2026 Financial Results on Thursday, January 8, 2026 · webull.com
Related · shared themes
CAT
Caterpillar
Caterpillar's shares look more likely to lag the S&P 500, as political risk to data-center building and margins near the bottom of target…
HAYW
Hayward Holdings
Hayward Holdings' raised 2026 guidance is already priced into shares trading above most broker targets, so they are more likely to lag the…
ALNT
Allient
Allient's record third-quarter orders and margins make the shares modestly more likely than not to beat the S&P 500 over three months…
CTOS
Custom Truck One Source
Custom Truck One Source's rental fleet growth and a third 2026 Adjusted EBITDA guidance raise, to $447.5–$460 million, make a modest lead…