Reasons Why Should You Add Apogee (APOG) to Your Portfolio
Apogee Enterprises, Inc. APOG has been benefiting from the strong performance in the Architectural Glass segment. The company’s efforts to improve efficiency and productivity, and controlling costs are also aiding its results.
Let's see what makes this stock a compelling investment option at the moment.
1Q24 Results Solid: Apogee reported earnings per share (EPS) of $1.05 in first-quarter fiscal 2024, surpassing the Zacks Consensus Estimate of 97 cents. The bottom line increased 5% year over year.
Apogee generated revenues of $362 million in the quarter under review, up 1.4% year over year. The top line surpassed the Zacks Consensus Estimate of $358 million.
Earnings Surprise History Positive: APOG has an average trailing four-quarter earnings surprise of 10%.
Growth Projections Optimistic: The Zacks Consensus Estimate for the company’s second-quarter fiscal 2024 earnings has moved 5% upward over the past 60 days and is pegged at $1.01 per share. The estimate for fiscal 2024 has moved up 1% in the same period and is pegged at $4.23 per share.
The favorable estimate revisions instill investor confidence in the stock.
FY24 Outlook Upbeat: 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.
Company Outperforms Industry: Shares of Apogee have gained 18.3% in the past year compared with the industry's growth of 15.7%.
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Segmental Performances Solid: 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 the fiscal first quarter. 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.
Strategic Actions Impressive: 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.
Balance Sheet Strong: The company’s solid liquidity position, coupled with 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. 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 & Other Stocks to Consider
Apogee currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. WOR, Astec Industries, Inc. ASTE and A. O. Smith Corporation AOS. WOR and ASTE sport a Zacks Rank #1 (Strong Buy) at present, and AOS has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved north by 22.6% in the past 60 days. Its shares gained 33.5% 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 A. O. Smith’s 2023 earnings per share is pegged at $3.57. The consensus estimate for 2023 earnings has moved 5% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 10.5%. AOS gained 11.1% in the last year.
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Worthington Industries, Inc. (WOR) : Free Stock Analysis Report
Astec Industries, Inc. (ASTE) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Apogee Enterprises, Inc. (APOG) : Free Stock Analysis Report
