Apogee Enterprises APOG has been delivering sequential improvement in margins and adjusted earnings per share (EPS) in the last six quarters, which is impressive considering the ongoing supply-chain disruptions and inflationary pressures. This has been aided by continued strong performance in Architectural Services and Framing Systems, which is likely to continue the momentum. Pricing actions and benefits from completed restructuring actions will also drive APOG’s growth.
Apogee currently has a Zacks Rank #3 (Hold) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy), a Zacks Rank #2 (Buy), or a Zacks Rank #3 offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s delve deeper and analyze the factors that make this stock worth holding at present.
Solid Q3 Results: APOG reported adjusted EPS of $1.07 for third-quarter fiscal 2023 (ended Nov 26, 2022), which surged 69.8% from the prior-year fiscal quarter’s 63 cents. Revenues were $368 million in the quarter, up 10.2% year over year. This growth was aided by solid improvement in the Architectural Framing Systems and Architectural Glass segments.
Upbeat FY23 Guidance: Apogee expects fiscal 2023 adjusted EPS between $3.90 and $4.05, backed by upbeat third-quarter fiscal 2023 results. The midpoint of the revised guidance indicates 60% growth from fiscal 2022’s adjusted EPS of $2.48. The company anticipates revenue growth of 10% for full-year 2023, primarily driven by growth of Architectural Framing Systems.
Positive Earnings Surprise History: APOG has an average trailing four-quarter earnings surprise of 45.9%.
Healthy Growth Projections: The Zacks Consensus Estimate for Apogee’s fiscal 2023 earnings is currently pegged at $3.96, indicating a 7% increase year over year. The earnings estimate has remained stable in the past two months.
Growth Drivers in Place: The Architectural Glass segment is growing as a result of better pricing and product mix, which reflect the company’s strategic shift toward more premium products. The segment’s operating margins have improved sequentially for five consecutive quarters. This was due to improved sales mix and productivity gains from its Lean program, as well as higher pricing that has helped offset the impact of inflated costs.
The company expects backlog growth in fiscal 2023 as well, backed by strong projects pipeline and improving order trends. This is likely to drive the company’s top and bottom line for at least the next two years. The company’s segments have the potential to increase market share, expand into new geographies and markets, and introduce new products. The company completed realignment of Framing Systems to support its go-to-market approach and enhance focus on target markets. This will reduce the overall cost structure of the segment.
Apogee has exposure in various projects across a range of sectors, including healthcare, education, and government and multifamily housing, as well as a growing renovation business. The company is witnessing strong demand from new construction activities. Apart from this, the various government stimulus measures provide support for the company’s construction end markets.
Shares of Apogee have gained 9.3% in the past six months compared with the industry’s growth of 25.8%.
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Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are OI Glass OI, Tenaris TS and Rockwell Automation ROK. OI and TS sport a Zacks Rank #1 (Strong Buy) at present, and ROK has a Zacks Rank #2 (Buy).
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share, indicating a 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares have gained 53.1% in the past six months.
Tenaris has an average trailing four-quarter earnings surprise of 11.5%. The Zacks Consensus Estimate for TS’ 2023 earnings is pegged at $6.12 per share, indicating a 41.3% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 18.1% in the past 60 days. Its shares have gained 12.8% in the past six months.
The Zacks Consensus Estimate for Rockwell Automation’s fiscal 2023 EPS is pegged at $11.24, implying a 18.4% increase from the previous year’s reported figure. The consensus estimate for fiscal 2023 earnings has moved 6% north in the past 60 days. ROK has a trailing four-quarter average earnings surprise of 6.9%. Its shares have gained 15.2% in the past six months.
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