On May 3, we maintained our Neutral recommendation on leading
designer and developer of glass products, services, and systems,
Apogee Enterprises Inc
), based on strong backlog in its architectural segment, revenue
growth opportunities from focus on operational improvements,
expansion and new product launches, recovery in U.S.
construction; partially offset by concerns regarding moderating
global economic growth.
Apogee's fourth-quarter fiscal 2013 earnings of 15 cents per
share were up 36% from the year-ago quarter. Total revenue
improved 6% to $180 million. However, both fell short of the
respective Zacks Consensus Estimates.
For fiscal 2014, Apogee expects earnings to lie in the range
of 90 cents to $1.00 per share on the back of high single-digit
revenue growth. Gross margin is anticipated to be at least 22% in
fiscal 2014. Geographic growth in the domestic markets,
introduction of new strong architectural glass pricing and mix
and improving installation margins are expected to contribute to
revenue growth. Furthermore, Apogee's productivity initiatives
are expected to generate 50 to 100 basis points of margin
Overall, in fiscal 2013, architectural segment revenues grew
6%, led by the installation, storefront and window businesses,
and operating income improved by more than $20 million, on the
back of improved architectural glass pricing and product mix,
good operational performance across the segment. Backlog in the
architectural segment at the end of the fourth quarter of fiscal
2013 was $297 million compared with $237 million in the year-ago
quarter. Apogee expects to deliver 86% of the backlog (nearly
$255 million) in fiscal 2014 and the remaining 14% (nearly $42
million) in fiscal 2015.
Apogee has faced challenging commercial construction market
conditions so far. However, the U.S. construction is finally
stabilizing and is on the road to a much-awaited recovery. The
American Institute of Architects projects a 5% increase in
spending in calendar 2013 for non-residential construction
project and 7.2% for 2014. This bodes well for Apogee's going
However, macroeconomic conditions poses a headwind for
Apogee's performance in fiscal 2014. Moderating global economic
growth and uncertainty in the global economic scenario can limit
Apogee's near-term revenue visibility
Other Stocks to Consider
Apogee retains a short-term Zacks Rank #4 (Sell). Other stocks
in the same industrial products sector with favorable Zacks ranks
Valmont Industries, Inc.
Mueller Water Products, Inc.
) with a Zacks Rank #1 (Strong Buy) while
Worthington Industries, Inc.
) carries a Zacks Rank #2 (Buy).
APOGEE ENTRPRS (APOG): Free Stock Analysis
MUELLER WATER (MWA): Free Stock Analysis
VALMONT INDS (VMI): Free Stock Analysis
WORTHINGTON IND (WOR): Free Stock Analysis
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