Unpacking Q3 Earnings: AZZ (NYSE:AZZ) In The Context Of Other Commercial Building Products Stocks

Let’s dig into the relative performance of AZZ (NYSE:AZZ) and its peers as we unravel the now-completed Q3 commercial building products earnings season.

Commercial building products companies, which often serve more complicated projects, can supplement their core business with higher-margin installation and consulting services revenues. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of commercial building products companies.

The 5 commercial building products stocks we track reported a slower Q3. As a group, revenues missed analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 0.7% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11.4% since the latest earnings results.

AZZ (NYSE:AZZ)

Responsible for projects like nuclear facilities, AZZ (NYSE:AZZ) is a provider of metal coating and power infrastructure solutions.

AZZ reported revenues of $417.3 million, up 2% year on year. This print fell short of analysts’ expectations by 2.1%. Overall, it was a slower quarter for the company with a significant miss of analysts’ revenue and EBITDA estimates.

Tom Ferguson, President, and Chief Executive Officer of AZZ, commented, "Second quarter sales expanded to $417.3 million, up 2.0% over the prior year, and generated adjusted diluted EPS of $1.55, up 13.1%. Metal Coatings delivered strong, double-digit sales gains on volume increases, while Precoat Metals' experienced weaker demand in several end markets. Infrastructure-driven project spending drove Metal Coatings second quarter results, supported by growth in construction, industrial, and electrical transmission and distribution end-markets. In line with broader industry trends, Precoat Metals' sales results were pressured by building construction, HVAC, and appliance end-markets. Adjusted EBITDA of $88.7 million or 21.3% of sales was down $3.1 million from the prior year same quarter, primarily attributable to the Welding Service's business within AVAIL and their normal slow summer season. On a year-to-date basis, sales increased $17.0 million, or 2.1% over prior year and Adjusted EBITDA increased $9.2 million, or 4.9% over prior year. We continue to have confidence that our full-year 2026 financial guidance is achievable, as we carefully monitor customer trends in key markets.

AZZ achieved the highest full-year guidance raise of the whole group. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $105.10.

Is now the time to buy AZZ? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Apogee (NASDAQ:APOG)

Involved in the design of the Apple Store on Fifth Avenue in New York City, Apogee (NASDAQ:APOG) sells architectural products and services such as high-performance glass for commercial buildings.

Apogee reported revenues of $358.2 million, up 4.6% year on year, outperforming analysts’ expectations by 2.1%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA and EPS estimates.

Apogee pulled off the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 9.2% since reporting. It currently trades at $37.65.

Is now the time to buy Apogee? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Insteel (NYSE:IIIN)

Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE:IIIN) provides steel wire reinforcing products for concrete.

Insteel reported revenues of $177.4 million, up 32.1% year on year, falling short of analysts’ expectations by 1.9%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.

As expected, the stock is down 15.6% since the results and currently trades at $31.68.

Read our full analysis of Insteel’s results here.

Janus (NYSE:JBI)

Standing out with its digital keyless entry into self-storage room technology, Janus (NYSE:JBI) is a provider of easily accessible self-storage solutions.

Janus reported revenues of $219.3 million, down 4.7% year on year. This result came in 3.9% below analysts' expectations. It was a disappointing quarter as it also recorded full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.

Janus had the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update among its peers. The stock is down 34.4% since reporting and currently trades at $6.10.

Read our full, actionable report on Janus here, it’s free for active Edge members.

Johnson Controls (NYSE:JCI)

Founded after patenting the electric room thermostat, Johnson Controls (NYSE:JCI) specializes in building products and technology solutions, including HVAC systems, fire and security systems, and energy storage.

Johnson Controls reported revenues of $6.44 billion, up 3.1% year on year. This print beat analysts’ expectations by 1.6%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

The stock is up 2.9% since reporting and currently trades at $114.23.

Read our full, actionable report on Johnson Controls here, it’s free for active Edge members.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

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