Wednesday Losers: Wilmington Trust, Apogee Enterprises and Progress Software


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Among the biggest losers in Wednesday's early trading are Apogee Enterprises (Nasdaq: APOG ) , Wilmington Trust (NYSE: WL ) and Progress Software (Nasdaq: PRGS ) .

Top Percentage Losers --Wednesday, June 23, 2010
Company Name (Ticker) Intra-Day Price Intra-Day
% Loss
52-Week High 52-Week Low
Apogee Enterprises (Nasdaq: APOG ) $11.75 - 7.8% $16.89 $11.13
Wilmington Trust
$12.00 -7.6 % $20.23 $9.75
Progress Software (Nasdaq: PRGS ) $30.47 - 3.3% $34.94 $20.05

*Table includes companies with minimum market capitalizations of $200 million and three month trading volumes of at least 100,000 shares. All percentage returns are listed as of 10:30AM Eastern Standard Time . Click on ticker symbols for up-to-the-minute price quotes and percentage gain data.

Paying up for Delaying an Integration

Over the past decade, Progress Software (Nasdaq: PRGS ) , which offers various applications to enhance communication between various computer programs and networks, pursued a growth-through-acquisition strategy. The deal-making frenzy paid off in the form of steadily-rising earnings before interest, tax, depreciation and amortization (EBITDA) , at least until the downturn hit. But an economic slowdown has a way of exposing operational weaknesses. That led the board to instill new management. And the new management quickly realized that the company should have integrated all of those deals into one platform a long time earlier. So they took the painful step of merging four disparate sales teams into one, knowing that it might disrupt sales activities in the near-term.

And sales have indeed taken a moderate hit. Progress noted on Tuesday evening that sales rose 9% from a year ago, below the growth rate posted by rivals such as Pegasystems (Nadaq: PEGA) and Informatica (Nasdaq: INFA ) . And that led management to lower fiscal (November) 2010 guidance. Shares are off -7% this morning on that downbeat view.

Action to Take -->
Once the integration effort is complete, investors may again come to appreciate the robust amount of IT spending taking place in this sector. Progress will remain a formidable competitor, but shares may stay restrained until the new management team can prove that the integration efforts paid off.


Wilmington Trust Slumps Badly

Prior to publishing a fresh report on a company -- especially one that involves a rating change -- a stock will sometimes move for reasons that can't always be explained at the time. That may help explain why shares of Wilmington Trust (NYSE: WL ) started falling Tuesday afternoon, hours before analysts at SunTrust lowered their rating on the stock. The actual release of that report is pushing shares down another -7% today to their lowest levels since February.

The analysts note that Wilmington Trust, a full-service financial firm, may be experiencing a rising tide of troubled loans. Wilmington has flubbed several quarters in a row, and analysts have shifted their thinking that this year would mark a profit turnaround . Now, they anticipate more losses, and think that 2011 will be the profit inflection point.

Action to Take --> There's no need to buy into this dip. It looks as if earnings estimates will need to fall even further before shares find a floor.


Apogee Awaits the Construction Upturn

As we noted in our look at Tuesday's losers USG (NYSE: USG ) is generating persistent losses while housing construction remains in a funk. A day later, we're hearing about similar open-ended losses at Apogee (Nasdaq: APOG ) , which makes specialized windows in commercial construction. The company on Tuesday evening reported a -21% drop in sales, and a $6 million operating loss, good for a double-digit drop in the stock on Wednesday. With $50 million in net cash still in the bank, Apogee could keep losing money for many quarters to come without running into trouble.

Long-term investors may want to stay focused on the company's potential in a better economic environment. Just a few years ago, Apogee routinely generated $2 to $3 a share in operating income , and $1.50 to $2 a share in net income .

Action to Take --> Shares, which traded for close to $30 in 2007, now trade just above $10. Even if the stock eventually retraces just half of that move, investors are still looking at considerable upside. In this market, it pays to buy high-quality companies that lack " timeliness ." Over time, these stocks will show nice gains as their sector strengthens, though shares may move sideways on the near-term.

-- David Sterman
Staff Writer

Disclosure: David Sterman does not own shares of any security mentioned in this article.

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

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This article appears in: Investing , Stocks
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