AZZ Inc. (AZZ) which is my longest-held stock in Emerging Growth, reported earnings this morning of 81 cents a share. That’s a pretty strong number and it was two cents higher than Wall Street’s estimate.
Revenues rose 31% but despite that impressive growth, the revenue number was slightly below the Street’s consensus. As a result, the stock is lower today, but I still rate the stocks a solid buy.
AZZ reiterated its 2010 EPS range of $2.75 to $2.95. They lowered their sales forecast a bit to a range of $395 million to 415 million. I was also impressed to see their backlog is 10% than it was one year ago which bodes well for more growth.
“We are very pleased with the growth and expansion of the Electrical and Industrial Products Segment for fiscal 2009. The full year results reflected improvement in every operating measurement. As we go forward, we continue to monitor closely our market opportunities and our operating structure due to the changing and challenging market conditions. Recently, incoming orders have been slower than desired due to increased customer deliberation on the release of new orders pertaining to projects that are in process as well as those that are in the planning phase. This combined with increased competitive pressure, particularly on large international quotations, has had an adverse impact on our incoming order rate. Our book to ship ratio for the quarter was essentially the same as it has been in the fourth quarter, three of the past four years. The fourth quarter continued to be a difficult quarter for us in terms of incoming orders. However, different than in prior years, we do not anticipate that our backlog will increase in the second quarter or recover to the record setting level of the third quarter of fiscal 2009 until we see improvement in our markets. We remain optimistic that we will see some leveling of our backlog after the second quarter and a modest recovery as we enter our fiscal 2011. Margins were very strong in the fourth quarter and fiscal year due to pricing discipline, improved project management, and assisted by favorable cost of key commodities. Our challenge is to continue to succeed in our efforts to expand our served markets and product offerings, while maintaining our strong operating performance and management of our cost/price ratios consistent with our historical practices.”
AZZ continues to be a very strong buy.