Apogee to Outperform - Analyst Blog

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We upgrade our recommendation on Apogee Enterprises Inc. ( APOG ) to Outperform based on its healthy first-quarter fiscal 2013 results and upbeat guidance.

Apogee delivered first quarter earnings of 6 cents per share, in stark contrast to the prior year loss of 8 cents. The results surpassed the Zacks Consensus Estimate of 3 cents.

Total revenues improved 1% year over year to $154.1 million. The improvement was driven mainly by the growth in Large-Scale Optical Technologies segment in the quarter. Sales, however, missed the Zacks Consensus Estimate of $164 million.

Backlog in the Architectural segment increased roughly 13% year over year to $267.3 million in the first quarter. Apogee expects to deliver 70% of the backlog (nearly $188 million) in fiscal 2013 and the remaining 30% (nearly $79 million) in fiscal 2014.

Based on its first quarter results and healthy backlog, the company increased its earnings guidance to the range of 48 cents-58 cents per share from the previous guidance of 40 cents-50 cents. The healthy performance that the company is currently exhibiting in the picture framing glass and acrylic businesses would be tailwinds in the next quarters.

Apogee has significant exposure to the U.S. market in the installation and storefront businesses and is also focusing on further increasing its exposure to that market to gain share. The company's strategy of increasing its domestic geographical footprint will help revenues grow moving forward. It expects revenue growth in the mid single-digits in fiscal 2013.

Recently, Apogee raised its quarterly dividend by 10% to 9 cents per share from the previous dividend of 8.15 cents, adding value to the shareholders. This dividend hike came almost after four years. Earlier, in November 2008, the company had hiked its dividend by 10% to 8.15 cents per share.

However, we note that the macroeconomic conditions might be a hindrance to Apogee's healthy performance in fiscal 2013. Moderating global economic growth and uncertainty in the global economic scenario can limit the company's near-term revenue visibility. 

Our recommendation on Apogee is in line with the short-term Zacks #1 Rank (Strong Buy).


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

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