Apogee Enterprises (APOG - Free Report) is poised to gain from focus on strategy to diversify revenue streams, and improve efficiency and productivity of operations. Additionally, efforts to increase market share, expand into new geographies and markets, and roll out products will drive growth.
The company currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities.
An Outperformer: Apogee’s shares gained 20.6% in the past month outperforming the industry’s growth of 19.2%.
Positive Earnings Surprise History: The company has a trailing four-quarter positive earnings surprise of 14.1%, on average.
Positive Growth Projections: Apogee recorded an earnings growth rate of 8.4% in the last five years, outperforming the industry’s growth of 4.3%. The company has a long-term expected earnings per share growth of 10.8%.
Superior Return on Assets (ROA): It currently has a ROA of 5.6%, while the industry's ROA is 3.4%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Growth Drivers in Place: The Architectural Services segment ended fiscal 2020 with a record backlog of $660 million. Backed by its strong pipeline, the company expects backlog growth in first-quarter fiscal 2021 as well. This is likely to drive top and bottom line for at least the next two years. Apogee’s new facility in Architectural Glass business is fully operational and likely to contribute to segment revenues and income in the days ahead. The company’s segments have the potential to increase market share, expand into new geographies and markets, and introduce new products.
Apogee’s continues to focus on strategy to diversify revenue streams, explore growth opportunities, and improve the efficiency and productivity of operations. This positions the company well to deliver stable growth and profitability. It has initiated several operational and commercial improvements including cost reductions, integrated product management and pricing strategies, and supply chain and operational efficiencies. Apogee has made significant progress identifying procurement cost savings opportunities across the enterprise. Taken together, these cost reduction and performance improvement actions are expected to generate annual savings of $30 to $40 million when fully implemented. The company plans to utilize these savings to improve overall operating margins.
Apogee is executing actions to maintain the financial and liquidity position during the coronavirus crisis. It is restricting capital expenditures and suspending share repurchases in order to preserve cash. At the end of fiscal 2020, the company had unused credit facility of $200 million, which will aid it to fund operations. Its total debt to total equity stands at 15.3%, much lower than its industry's 849.4%. Over the past few quarters, Apogee's times interest earned ratio has gone up and was at 10.8x as of Feb 29, 2020, better than the industry's 0.2x.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector are SiteOne Landscape Supply, Inc. (SITE - Free Report) , Axon Enterprise, Inc. (AAXN - Free Report) and Broadwind Energy, Inc. (BWEN - Free Report) . While SiteOne Landscape sports a Zacks Rank #1, Axon Enterprise and Broadwind Energy carry a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
SiteOne Landscape has a projected earnings growth rate of 15.4% for 2020. The company’s shares have gained 21% in the past month.
Axon has an estimated earnings growth rate of 14.2% for the ongoing year. The company’s shares have rallied 24% in a months’ time.
Broadwind Energy has an expected earnings growth rate of 174% for the current year. The stock has appreciated 37% in the past month.
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