We upgrade our recommendation on
Apogee Enterprises Inc.
) to Outperform based on its healthy first-quarter fiscal 2013
results and upbeat guidance.
APOGEE ENTRPRS (APOG): Free Stock Analysis
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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
Our recommendation on Apogee is in line with the short-term Zacks
#1 Rank (Strong Buy).