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Will Apogee (APOG) Surprise Estimates in Q2 Earnings?

Apogee Enterprises, Inc.APOG is scheduled to release its second-quarter 2016 financial results on Sep 16, 2015. Last quarter, the company delivered a positive earnings surprise of 17.14%. Let's see how things are shaping up for this announcement.

Factors at Play

Consolidated backlog at the end of the first quarter increased 22% year over year to $471 million. Regarding the timing, approximately 66% or $311 million of the backlog is to be delivered in fiscal 2016 and the balance 34% or around $160 million in fiscal 2017. The company expects strong backlog growth in the second quarter, driven by rising pipeline of project commitments and awards as well as a high level of bidding activity.

Based on the double-digit revenue and earnings growth delivered in the first quarter of fiscal 2016, Apogee increased its earnings per share guidance range for the year to $2.10 to $2.25 from $2.05 to $2.20. The company continues to expect revenue growth of 10% to 15%. This outlook is based on continued strength of its backlog, commitments, and bidding and award activity, backed by industry forecasts of low double-digit growth for the commercial construction market sectors. Apogee expects to cross the $1 billion threshold in revenues in fiscal 2016. The momentum witnessed in the first quarter is expected to continue through the next three quarters as well.

Apogee will benefit from improving architectural market conditions and is expecting double-digit architectural market growth through 2016. The company continues to focus on achieving top-line growth by introducing new products, expanding both in domestic and international markets, and entering new markets for its architectural and large-scale optical businesses.

However, even though backlog is expected to grow over the course of fiscal 2016, growth rate will be moderate as growth in the architectural services segment, which is the largest contributor to backlog, is estimated to be in the mid to single-digit range. Nevertheless, the company is focused on margin expansion. The company's entry in the Brazilian architectural glass market exposes it to the soft economy in the region as well as to inherent risks associated with operations in foreign markets.

Earnings Whispers?

Our proven model does not conclusively show that Apogee is likely to beat earnings as it lacks the required combination of two key ingredients, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Zacks ESP : Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are at 50 cents per share.

Zacks Rank : Apogee has a Zacks Rank #3 (Hold), which when combined with an Earnings ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some other companies which are worth considering, as our model shows that they have the right combination elements to post an earnings beat:

Global Brass and Copper Holdings, Inc. BRSS , has an Earnings ESP of +4.00% and a Zacks Rank #2.

Cintas Corporation CTAS , with an Earnings ESP of +1.11%, carries a Zacks Rank #2.

Lindsay Corporation LNN , holds an Earnings ESP of +12.50% and a Zacks Rank #3

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LINDSAY CORP (LNN): Free Stock Analysis Report

CINTAS CORP (CTAS): Free Stock Analysis Report

APOGEE ENTRPRS (APOG): Free Stock Analysis Report

GLOBAL B&C HLD (BRSS): Free Stock Analysis Report

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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 Nasdaq, Inc.


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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