Industry Analysts Just Upgraded Their AZZ Inc. (NYSE:AZZ) Revenue Forecasts By 24%

AZZ Inc. (NYSE:AZZ) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The analysts have sharply increased their revenue numbers, with a view that AZZ will make substantially more sales than they'd previously expected.

Following the upgrade, the current consensus from AZZ's three analysts is for revenues of US$1.2b in 2023 which - if met - would reflect a substantial 37% increase on its sales over the past 12 months. Per-share earnings are expected to swell 14% to US$3.63. Previously, the analysts had been modelling revenues of US$964m and earnings per share (EPS) of US$3.46 in 2023. The forecasts seem more optimistic now, with a great increase in revenue and a modest lift to earnings per share estimates.

Check out our latest analysis for AZZ

Despite these upgrades, the analysts have not made any major changes to their price target of US$60.50, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values AZZ at US$62.00 per share, while the most bearish prices it at US$59.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting AZZ's growth to accelerate, with the forecast 28% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that AZZ is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at AZZ.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on AZZ that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.