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Does Apogee Enterprises, Inc. (NASDAQ:APOG) Have A Volatile Share Price?

Simply Wall St

If you're interested in Apogee Enterprises, Inc. (NASDAQ:APOG), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.

Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is one. Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market.

View our latest analysis for Apogee Enterprises

What does APOG's beta value mean to investors?

Given that it has a beta of 1.70, we can surmise that the Apogee Enterprises share price has been fairly sensitive to market volatility (over the last 5 years). If this beta value holds true in the future, Apogee Enterprises shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. Beta is worth considering, but it's also important to consider whether Apogee Enterprises is growing earnings and revenue. You can take a look for yourself, below.

NasdaqGS:APOG Income Statement, October 4th 2019

Could APOG's size cause it to be more volatile?

Apogee Enterprises is a small company, but not tiny and little known. It has a market capitalisation of US$984m, which means it would be on the radar of intstitutional investors. It is quite common to see a small-cap stock with a beta greater than one. In part, that's because relatively few investors can influence the price of a smaller company, compared to a large company.

What this means for you:

Since Apogee Enterprises tends to moves up when the market is going up, and down when it's going down, potential investors may wish to reflect on the overall market, when considering the stock. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Apogee Enterprises’s financial health and performance track record. I urge you to continue your research by taking a look at the following:

  1. Future Outlook: What are well-informed industry analysts predicting for APOG’s future growth? Take a look at our free research report of analyst consensus for APOG’s outlook.
  2. Past Track Record: Has APOG been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of APOG's historicals for more clarity.
  3. Other Interesting Stocks: It's worth checking to see how APOG measures up against other companies on valuation. You could start with this free list of prospective options.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.