A month has gone by since the last earnings report for Apogee Enterprises (APOG - Free Report) . Shares have added about 7.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Apogee Enterprises due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Apogee Misses on Q3 Earnings & Revenues, Trims View
Apogee Enterprises delivered third-quarter fiscal 2020 (ended Nov 30, 2019) adjusted earnings per share of 57 cents, which missed the Zacks Consensus Estimate of 76 cents by a margin of 25%. The reported figure also declined 27% from the prior-year quarter.
Apogee reported revenues of $337.9 million, missing the Zacks Consensus Estimate of $357 million. The revenue figure also dropped 6% from the prior-year quarter.
Cost of sales in the fiscal third quarter was down 4% year over year to $263.6 million. Gross profit declined 12% year over year to $74.3 million. Gross margin came in at 22% compared with the 23% recorded in the year-ago quarter.
Selling, general and administrative (SG&A) expenses came in at $52.7 million, flat compared with the prior year quarter. Adjusted operating income plunged 30.8% year over year to $21.7 million. Operating margin in the reported quarter was 6.4% compared with the prior-year quarter’s 8.7%.
In the fiscal third quarter, revenues in the Architectural Framing Systems segment declined 9% year over year to $165.5 million. The segment’s operating income slumped 51% year over year to $6.3 million.
Revenues in the Architectural Glass Systems segment slipped 9% year over year to $89.4 million. Operating income came in at $4 million, reflecting year-over-year decline of 30%.
Revenues in the Architectural Services segment were down 5% year over year to $69 million. The segment’s operating profit fell 25% year over year to $6.5 million.
Revenues in the Large-Scale Optical Technologies segment climbed 4% year over year to $24.4 million. Operating income improved 2% year over year to $6.8 million.
The Architectural Services segment’s backlog went up 21% to a record $607 million in the reported quarter from the last quarter’s $502 million. Backlog in the Architectural Framing segment amounted to $378 million compared with the prior-year quarter’s $388 million.
Apogee had cash and cash equivalents of $10.5 million at the end of the fiscal third quarter compared with $41.4 million at the end of the prior-year quarter. Cash flow from operating activities were $53.6 million as of Nov 30, 2019 compared with the $70.6 million reported in the prior-year period. Long-term debt was $95.8 million as of Nov 30, 2019 compared with $245.7 million as of Mar 2, 2019.
So far in fiscal 2020, Apogee has returned $33.8 million of cash to shareholders through share repurchases and dividend payments.
Tepid Fiscal 2020 Guidance
The company has lowered its fiscal 2020 view due to lower-than-expected sales volumes in Architectural Framing Systems and Architectural Glass, as well as the operational difficulties in Architectural Framing Systems. These factors are likely to impact the fiscal fourth-quarter results.
Apogee now expects revenue growth between flat to down 1% compared with previous growth of 1. The company expects capital expenditures of $55 million compared with the prior guidance of $60-$65 million. Adjusted earnings per share are predicted in the band of $2.15-$2.30 compared with the previous estimate of $3.00-$3.20.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -64.29% due to these changes.
Currently, Apogee Enterprises has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Apogee Enterprises has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.