Apogee Enterprises
APOG
has been delivering sequential improvement in margins and adjusted earnings per share in the last five 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 expected to continue the momentum. Pricing actions, benefits from completed restructuring actions as well as cost-saving actions and efforts to improve productivity and efficiency will also drive APOG’s results.
Apogee currently has a Zacks Rank #3 (Hold) and a
VGM Scor
e
of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy), or Rank #2 (Buy), or #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 in.
Solid Q2 Results
: APOG reported adjusted earnings per share of $1.06 for second-quarter fiscal 2023 (ended Aug 27, 2022), which surged 100% from the prior-year fiscal quarter’s 53 cents. Revenues were a record $372 million in the quarter, up 14% year over year aided by solid growth in the Architectural Framing Systems and Architectural Services.
Upbeat FY23 Guidance
: Backed by upbeat second quarter fiscal 2023 results, Apogee raised adjusted EPS for fiscal 2023 to $3.75-$4.05, up from the prior guided range of $3.50 to $3.90. The midpoint of the revised guidance indicates 57% growth from the adjusted earnings per share of $2.48 in fiscal 2022. The company anticipates revenue growth of 8-10% for the fiscal, to be primarily driven by Architectural Framing Systems.
Positive Earnings Surprise History
: APOG has an average trailing four-quarter earnings surprise of 48.4%.
Healthy Growth Projections
: The Zacks Consensus Estimate for Apogee’s fiscal 2023 earnings is currently pegged at $3.92, suggesting year-over-year growth of 58%. The consensus mark for fiscal 2024 earnings stands at $3.93, indicating an expected improvement of 0.3% over fiscal 2023.
Growth Drivers in Place
The Architectural Services segment has been winning several new project awards and building a project pipeline for the coming years. The Framing Systems segment has been benefiting from improved pricing and completed restructuring and cost-saving actions. Backed by its strong projects pipeline and improving order trends, the company expects backlog growth in fiscal 2023 as well. This is likely to drive the top and the 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.
Apogee has broad exposure in various projects across different sectors, including healthcare, education, government and multifamily housing, as well as a growing renovation business. The company is witnessing strong demand for new construction activities. Employment growth and expansion in industrial activity raise hope for the company’s business in the near term. Apart from this, the various government stimulus measures provide support to the company’s construction end markets.
Price Performance
Image Source: Zacks Investment Research
Shares of Apogee have gained 9.4% in the past year compared with the
industry
’s 1.3% decline.
Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are
Applied Industrial Technologies
AIT
,
Tenaris
TS
and
W.W. Grainger
GWW
. AIT sports a Zacks Rank #1, while TS and GWW hold Zacks Rank #2 at present.
Applied Industrial Technologies’ earnings surprise in the last four quarters was 24.7%, on average. In the past 60 days, its earnings estimates have increased 4.6% for 2022. For the ongoing year, the bottom line is estimated to be $7.52, suggesting growth of 14.3% from the previous year’s level. AIT stock has appreciated 28% in the past year.
Tenaris has an estimated year-over-year earnings growth rate of 131.5% for the current fiscal year. The earnings per estimate are currently pegged at $4.33. The estimates have been revised by 5.1% north in the past 60 days. TS has an average trailing four-quarter earnings surprise of 20.9%. Its shares have surged 60% over the past year.
W.W. Grainger delivered a trailing four-quarter earnings surprise of 10.1%, on average. GWW’s current-year earnings are estimated to be $29.31 per share at present, suggesting an estimated growth of 161.1% from the year-ago reported figure. The estimates have moved up 4.4% in the last 60 days. GWW’s shares have risen 17% in the past year.
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