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Here's Why You Should Add Apogee (APOG) Stock Right Away

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Apogee Enterprises, Inc. (APOG - Free Report) is well poised to grow on the back of acquisitions, improving architectural market and focus on operational improvements. We believe that the time is right for you to add the stock to portfolio as it looks promising. Let’s have a closer look at the factors aiding the stock.

Factors That are Working in Favor of Apogee

Price Performance: Share price of this leader in technologies for the design and development of value-added glass products, services, and systems has surged 67% in the last three years, outperforming the Zacks categorized Glass Products sub industry’s decline of 15.4%.


We note that the industry is also favorably placed as it occupies a space in the top 6% of the Zacks classified industries (15 out of the 256).

Sound Q1 Performance: Apogee reported adjusted earnings per share of 62 cents in first-quarter fiscal 2018 (ended Jun 3, 2017), up 2% from 61 cents per share in the prior-year quarter.

Upbeat Company Guidance: During the first-quarter fiscal 2017 conference call, Apogee updated earnings per share guidance to $3.65–$3.85 from the prior range of $3.35–$3.55 for fiscal 2018. The company also lifted revenue growth outlook to 26–28% from the previous projection of 10%.

Apogee continues to expect mid-single digit U.S. commercial construction market growth in fiscal 2018, as market activity, the Architecture Billings Index (ABI), office employment indicate a positive momentum. With internal market visibility from backlog, commitments and bidding activity along with external metrics moving in the right direction, the company anticipates continuous U.S. non-residential market growth.

Superior Return on Assets (ROA): Apogee’s ROA of 11.5%, as compared with the industry average of 4.3%, exhibits the company’s efficiency in generating earnings by effectively managing assets.



Higher Inventory Turnover Ratio: Over the trailing 12 months, the inventory turnover ratio for Apogee has been 11.72% compared with the industry’s level of 5.41%.



A higher inventory turnover than the industry average means that inventory is sold at a faster rate, suggesting inventory management effectiveness.

Estimates Moving Up: Annual estimates for Apogee have moved north in the past 30 days, reflecting analysts’ confidence on the stock. In this period, the Zacks Consensus Estimate for fiscal 2018 has increased by around 7% to $3.80 per share. The Zacks Consensus Estimate for fiscal 2019 has also moved up 7% to $4.66.

Positive Earnings Surprise History: Apogee has outpaced the Zacks Consensus Estimate in two of the trailing four quarters, delivering a positive average earnings surprise of 3.42%.

Healthy Growth Prospects:  The Zacks Consensus Estimate for revenues is at $1.31 billion for fiscal 2018, reflecting 17.85% year-over-year growth. The estimate for fiscal 2019 of $1.49 billion projects 13.67% annual growth. The Zacks Consensus Estimate for earnings for fiscal 2018 is pegged at $3.80, within management’s guidance and depicting growth of 27.95%. The estimate for fiscal 2019 reflects year-over-year growth of 22.63%.

The stock has an estimated long-term earnings growth rate of 12.5%, higher than the industry average of 9.6%.

Growth Drivers: Apogee’s results highlight successful execution of key strategies in commercial construction markets. The company is delivering on initiatives to better position itself over a cycle, including growing its share of mid-size projects in architectural glass, expanding geographic presence and product offerings, further penetrating the retrofit market and executing acquisitions. Focus on productivity improvement, cost control and improvements in volume, mix, project margins as well as operating leverage will also aid margin expansion.

Favorable Zacks Rank: Apogee sports a Zacks Rank #1 (Strong Buy). Going by the Zacks model, companies sporting a Zacks Rank #1 have strong chances of outperforming the broader market. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Some other top-ranked stocks worth considering in the sector include AGCO Corporation (AGCO - Free Report) , Altra Industrial Motion Corp. and Parker-Hannifin Corporation (PH - Free Report) . AGCO has an average positive earnings surprise of 40.39% in the trailing four quarters. Altra Industrial Motion generated an average positive earnings surprise of 15.93% in the preceding four quarters, while Parker-Hannifin has an average positive earnings surprise of 14.94% in the last four quarters.

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