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AZZ Expands Metal Coatings with Enhanced Powder Buyout

Provider of engineered services and welding solutions, AZZ Inc. AZZ, announced the buyout of the assets of Enhanced Powder Coating Ltd (EPC), a privately held plating and anodizing services provider, based in Gainesville, TX. However, the terms of the agreement were kept under wraps.

With metallic corrosion costs significantly rising in the North American economy, hot-dip galvanizing serves as an important input for the building and infrastructural sectors. Along with zinc, galvanized steel represents a highly sustainable and cost-effective material solution. Under such a situation, AZZ’s decision to acquire will enhance its metal coating capabilities and enable it to meet rising demand every year.

Company’s Expansion Plans

AZZ intends to pursue continued growth through acquisition of companies or assets that aid expansion of its existing service offerings along with increasing geographic footprint.

Recently in May, AZZ announced the opening of its first powder coat facility in Crowley, TX. The facility features its technology, PowderGALV® for metal coating purposes. The company’s North American presence provides a strategic advantage in a highly competitive market and expanded coatings technology.

With the above initiatives it is evident that the company is on the path of undertaking strategic initiatives to grow Metal Coatings segment with innovative products and services that complement its galvanizing business. AZZ’s Galvanizing Segment provides hot-dip galvanizing and other metal coatings to the steel fabrication industry through 41 facilities located throughout the U.S. and Canada.

Expansion by Peers

Another company in the same space which is looking to expand through restructuring activities is Eaton Corporation plc ETN, which is investing in R&D programs to introduce new products and power management solutions to reduce energy consumption and carbon emissions. The company is also upgrading the existing systems to maintain its strong position in the global markets.

Price Performance

In the last 12 months, AZZ has underperformed the Zacks categorized Machinery-Electrical industry. The company’s shares declined 12.9% against the industry’s gain of 12.4%.


In the last twelve months, AZZ’s Galvanizing segment encountered a decline in orders due to soft demand from the oil and gas, petrochemical, and solar space, which hurt the operations of the company.

Stocks to Consider

AZZ currently carries a Zacks Rank #3 (Hold). Investors can consider better-ranked stocks like Regal Beloit Corporation RBC and Smith (A.O.) Corporation AOS from the same space. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Regal Beloit delivered an average surprise of 1.48% in the trailing four quarters. Its 2017 estimates have risen by 1.90% to $4.82 per share in the last 60 days.

Smith Corporation delivered an average surprise of 4.88% in the trailing four quarters. Its 2017 estimates have risen by 0.96% to $2.10 per share in the last 90 days.

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AZZ Inc. (AZZ): Free Stock Analysis Report
 
Smith (A.O.) Corporation (AOS): Free Stock Analysis Report
 
Eaton Corporation, PLC (ETN): Free Stock Analysis Report
 
Regal Beloit Corporation (RBC): Free Stock Analysis Report
 
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