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Apogee Stock Down 32% in the Past Year: Will It Bounce Back?

Zacks Equity Research

Shares of Apogee Enterprises, Inc. APOG have plunged around 32% in the past year, wider than the industry’s loss of 23%. This can be attributed to reduced volumes due to project timing delays and inflationary pressures owing to tariffs.

Notably, the company’s earnings per share estimates for 2019 and 2020, moved south over the past 30 days, reflecting bearish analyst sentiment. For 2019, the estimate moved down 2% to $3.13. For 2020, the estimate has declined 7% to $3.59.

What’s Pulling the Stock Down?

Apogee witnessed lower revenues and profits in the Architectural Framing Systems segment in third-quarter fiscal 2019, reflecting reduced volumes due to project timing delays. Apogee expects this near-term impact will carry over into fourth-quarter fiscal 2019 as well.


For fiscal 2019, Apogee reduced its revenue growth outlook to between 6% and 7% from the prior guidance of 8-10%, due to lower projected revenues in the Architectural Glass and Architectural Framing Systems segments. The company has also trimmed its earnings per share guidance for the fiscal to $3.13-$3.33.

Further, Apogee revised its operating margin guidance to 8.4% from the previous 8.3-8.8%. It witnessed inflationary pressure, and cost hike in freight and lumber. Also, tariffs on aluminum and steel will dampen the company’s margins.

In addition, Apogee’s Zacks Rank #4 (Sell) only reaffirms that it is plagued with several headwinds at the moment. The unfavorable rank implies that investors should get rid of the stock from their respective portfolios. In fact, stocks witha Zacks Rank #4 or 5 (Strong Sell) are likely to underperform the broader market over the next one to three months.

Will the Stock Rebound?

Apogee expects to benefit from its focus on strategy to grow and diversify business which will strengthen operations and drive profitability. The company’s continued focus on investment in projects will also drive strategic growth and capacity, and improve productivity.

Regarding acquisitions, Apogee is primarily focusing on the integration of EFCO to recognize margin opportunities. The company is moving forward with synergy goals by leveraging supplier relationships and driving on-time delivery. Further, it expects robust award activity from the Sotawall acquisition, which bodes well for fiscal 2019 and beyond.

We believe these factors will eventually benefit Apogee’s results and drive its share price. However, the stock will remain under pressure due to the above-mentioned headwinds for the time being.

Stocks to Consider

Some better-ranked stocks in the same sector are Axon Enterprise, Inc AAXN, Alarm.com Holdings, Inc. ALRM and Brady Corp. BRC. While Axon Enterprise sports a Zacks Rank #1 (Strong Buy), Alarm.com and Brady carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon Enterprise has a long-term earnings growth rate of 25%. The stock has surged around 80% in a year’s time.

Alarm.com has a long-term earnings growth rate of 17%. Its shares have gained 49% in the past year.

Brady has a long-term earnings growth rate of 7.5%. The company’s shares have been up 18% during the past year.

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