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Lower Volumes & Tariffs to Hit Apogee's (APOG) Performance

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On Jan 2, we issued an updated research report on Apogee Enterprises, Inc. (APOG - Free Report) . The company’s performance is likely to be hindered by reduced volumes due to project timing delays and inflationary pressures owing to tariffs.

Let’s illustrate these factors in detail.

Guidance Cut to Reflect Weaker Segment Performance

For fiscal 2019, Apogee reduced its revenue growth outlook to between 6% and 7% compared to 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.

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.

Tariffs Remain a Woe

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 goods will dampen the company’s margins.

Share Price Performance

Shares of Apogee have lost around 32% over the past year compared with the industry’s decline of 26%.

Zacks Rank & Key Picks

Apogee carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the same sector are Brady Corporation (BRC - Free Report) , Lindsay Corporation (LNN - Free Report) and Enersys (ENS - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Brady has a long-term earnings growth rate of 7.5%. The company’s shares have gained 12% over the past year.

Lindsay has an estimated long-term growth rate of 18%. Its shares have rallied 8% in a year’s time.

Enersys has a projected long-term growth rate of 10%. Its shares have rallied 9% over the past year.

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