Apogee Enterprises, Inc.
) climbed to a new 52-week high on September 20, 2012 after
reporting its forecast-topping second quarter results. This
industrial glass maker raised its earnings guidance for fiscal
2013, sparking upward revisions from analysts that boosted the
Zacks Consensus Estimate.
This Zacks #2 Rank ("Buy") fits the bill for aggressive growth
investors, given its rising estimates, solid double-digit earnings
growth projection for this year, favorable building industry
trends, strong architectural backlog and the healthy performance of
its framing glass and acrylic business.
Sixth Straight Beat
Apogee Enterprises reported solid second-quarter fiscal 2013
results on September 19, including earnings per share of 17 cents
that reversed a loss of 6 cents a year ago. The result comfortably
beat the Zacks Consensus Estimate of 9 cents by nearly 90%, marking
the sixth positive surprise over the last seven quarters.
Revenues rose 6% year over year to $175.9 million, driven by growth
across the board. Gross margin improved to 20.5% from 15.7% a year
Revenues from the core Architectural Products and Services segment
rose 5% year over year to $156.4 million, fueled by share gains in
the storefront and installation businesses. The segment returned to
profit in the quarter. Moreover, the division's backlog climbed 32%
and reached its highest level in twelve quarters.
Sales from the Large-Scale Optical Technologies division surged 19%
to $19.6 million. The improvement stemmed from higher value-added
glass and acrylic mix across picture framing sectors.
Apogee raised its earnings guidance for fiscal 2013 to between 56
cents and 64 cents per share from the previous guidance of 48 cents
to 58 cents. It expects revenue growth in the mid single-digits,
driven by share gains in the architectural businesses.
Earnings Estimates Shoot Higher
For fiscal 2013, all three estimates have been revised higher in
the last 30 days, pushing the Zacks Consensus Estimate upward by
18% to 66 cents a share. This reflects an estimated annualized
growth of roughly 198.5%.
All three estimates have moved higher for fiscal 2014 as well,
sending the Zacks Consensus Estimate up by 20% to 95 cents per
share. This represents an estimated year over year growth of 44.7%.
Valuation: Stretched but Justified
Apogee's valuation appears expensive on a P/E basis. Its trailing
twelve months P/E of 36.39x is much higher than the peer group
average of 6.56x. Moreover, the stock is currently trading at a
forward P/E of 29.92x, which is well above the peer group average
of 12.45x. The price-to-book of 1.72x is in line with the peer
group average. Given the robust earnings trajectory, the premium
valuation should not scare investors away.
Technical indicators show that Apogee has been above its 200-day
moving average since late 2011. Moreover, after a series of peaks
and troughs, the stock is trading above its 50-day moving average
of late. Notably, following a golden crossover in early 2012, the
50-day moving average continues to read higher than the 200-day
moving average, manifesting the bullish trend.
Founded in 1949, Apogee Enterprises Inc. is a leader in
technologies for the design and development of value-added glass
products, services and systems. The company's larger Architectural
segment is engaged in designing, engineering, fabricating,
installing and renovating windows and walls of glass that make up
the outside of the commercial buildings. The smaller Large-Scale
Optical Technologies segment makes value-added glass and acrylic
products for the custom framing market as well as optical thin film
coatings for consumer electronic displays. Apogee, which has a
market cap of roughly $549 million, markets its products directly
as well as through independent distributors and retailers.
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