Apogee (APOG) Hits 52-Week High: What's Aiding Its Rally?
Apogee Enterprises, Inc. APOG shares scaled a new 52-week high of $51.69 on Sep 1 before closing the session lower at $51.17.
APOG has a market capitalization of $1.1 billion. Its shares have gained 30.8% in the past year compared with the industry's growth of 27.7%.
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What’s Driving Apogee?
Solid Segmental Performances: Apogee’s Architectural Glass segment witnessed solid year-over-year growth and margin expansion in the first quarter of fiscal 2024 despite significant supply-chain and inflation headwinds.
The segment is gaining on improved pricing and product mix, reflecting the company’s strategic shift toward more premium products. The segment is also benefiting from productivity gains from its Lean program and higher pricing that helped offset inflation.
The Architectural Framing Systems segment has been gaining from pricing actions, and the benefits of completed restructuring and cost-saving actions. The segment's backlog was $221 million at the end of first-quarter fiscal 2024.
The Architectural Services segment's backlog was $709 million at the end of the first quarter of fiscal 2024. The segment has been winning several project awards and building a project pipeline for the coming years.
Upbeat FY24 Outlook: Backed by its strong projects pipeline and improving order trends, the company expects backlog growth for fiscal 2024. Apogee expects fiscal 2024 adjusted EPS between $4.15 and $4.45, up from the previously disclosed $3.90-$4.25. The mid-point of the updated guidance indicates 8% year-over-year growth.
Impressive Strategic Actions: Following a detailed strategic review of its business, the company has embarked on a plan to deliver profitable growth and improved returns. The strategy is centered on three pillars, including becoming the economic leader in its target markets, actively managing the portfolio to drive higher margins and Return on Invested Capital (ROIC), and strengthening its core capabilities to enable profitable growth.
In 2022, it announced its three-year financial goals, which include ROIC greater than 12%, an operating margin greater than 10% and revenue growth greater than 1.2 times the rise of the non-residential construction market.
In fiscal 2023, ROIC hit 13.8%, surpassing the company's goal. The operating margin rose to 8.7%, making significant progress toward the 10%+ target after only a year of the three-year plan.
Solid Balance Sheet: The company’s solid liquidity position, coupled with a strong free cash flow, places it well to drive growth. Apogee returned $10.4 million in cash to shareholders through dividend payments in the first quarter of fiscal 2024.
The company has no significant debt maturities until 2027. The total debt was $171 million at the end of the first quarter of fiscal 2024. The company will continue to evaluate future share repurchases, considering cash flow, debt levels, market conditions and other capital allocation options.
Zacks Rank & Stocks to Consider
Apogee currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Caterpillar Inc. CAT, Astec Industries, Inc. ASTE and Eaton Corporation plc. ETN. CAT and ASTE sport a Zacks Rank #1 (Strong Buy) at present, and ETN has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has an average trailing four-quarter earnings surprise of 18.5%. The Zacks Consensus Estimate for CAT’s 2023 earnings is pegged at $19.81 per share. The consensus estimate for 2023 earnings has moved north by 11.4% in the past 60 days. Its shares gained 51.6% in the last year.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $2.81 per share. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. ASTE’s shares gained 22.8% in the last year.
The Zacks Consensus Estimate for Eaton ’s 2023 earnings per share is pegged at $8.80. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 3%. ETN gained 68.8% in the last year.
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