AZZ Incorporated (AZZ) would make a good choice for investors seeking growth and income.
The company is expected to grow its earnings per share at 12.0% per year for the next three to five years. The stock also offers investors a dividend yield of 2.4%.
This Zacks #2 Rank stock trades at 18.9x fiscal year 2011 consensus EPS estimates and 14.5x fiscal year 2012 consensus EPS estimates.
Business
AZZ Inc. makes electrical equipment and components for power generation, transmission and distribution, and industrial markets. It is also leading provider of hot dip galvanizing services to the steel fabrication market.
AZZ has a large base of stable customers in a wide range of industries including utilities, petrochemical, mining, and transportation. As such, AZZ is not overly reliant on one business or customer for its revenues.
Additionally, the company’s growth strategy includes making small, roll up acquisitions to help complement its organic growth. For example, on April 2, AZZ acquired North American Galvanizing & Coatings, Inc. (NGA) for $126 million in cash.
Fiscal Fourth-Quarter Results
On April 1, the company reported fiscal Q4 results. Revenues declined 15.4%, and its backlog dropped 37% at the end of the fourth quarter.
Earnings per share dropped 20%, but came in ahead of expectations. AZZ earned $0.64 per share, beating the Zacks Consensus Estimate by 3 cents.
The company reiterated its previous guidance for Fiscal 2011. It still expects to have revenues of $310 million to $330 million and EPS of $1.85-$2.20.
Estimates Moving Higher
After AZZ reported better-than-expected Q4 results, analysts lifted their estimates for this year and next.
In the last 30 days, the Zacks Consensus Estimate for fiscal 2011 increased 12 cents, or 5.8%, to $2.20, and the Zacks Consensus Estimate for fiscal 2012 increased 52 cents, or 22.0%, to $2.88.
The Chart
From September 2009 through the beginning of February, AZZ shares fell about 31%. After bottoming on February 5, the stock has rebounded over 42%, and it is challenging 52-week highs.
