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Bear Of The Day: Apogee Enterprises (APOG)

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Apogee Enterprises (APOG - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  Let's take a look at why this stock has fallen to the lowest Zacks Rank and became the Bear.

Description

Apogee Enterprises is a leader in technologies for the design and development of value-added glass products, services, and systems. The company operates under four segments, with three of the segments serving the commercial construction market:

The Architectural Glass segment (25% of total revenues in fiscal 2019) fabricates glass used in customized window and wall systems forming the outside skin of commercial and institutional buildings. The segment consists of Viracon, a fabricator of coated, high-performance architectural glass for global markets. Its markets include the U.S. government, offices, education, health care and hotels.

Recent Earnings

The most recent quarter was a big miss of the Zacks Consensus Estimate.  The company reported $0.57 in EPS when the estimate was calling for $0.76.  That 19 cent difference translates to a negative earnings surprise of 25%.

The company also lowered guidance when they reported and that is the reason that estimates took a tumble.

Estimates Fall

When earnings estimates fall, the Zacks Rank tends to fall as well.  The movement in earnings estimates is the single biggest factor that influences the Rank, so when a company lowers guidance you can rest assured that the Rnak will slide.

APOG saw estimates for the current quarter slide from 98 cents to 84 cents.  The full year 2019 number fell from $3.04 to $2.84.  

The Zacks Consensus Estimate for 2020 slid from $3.57 to $3.35 as well.

Valuation

At 11x forward estimates the stock looks pretty attractive after taking a steep drop.  This stock has been a good one for a long time, so this reduction in guidance is something that needs to be explored in a deeper fashion.  Sure the estimates fell and that pushed the Rank down, but there could be a bigger problem or it could be a buying opportunity.  I am going to keep this stock on my radar screen and see how next quarter comes in.

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