Markets

Will Apogee's Results Suffer on Construction Site Delays?

A stock chart on display
Credit: Shutterstock photo

We issued an updated research report on Apogee Enterprises, Inc.APOG on Sep 23, 2015. Apogee's performance is riddled with headwinds like construction site delays, foreign exchange volatility and a sluggish Brazilian economy.

Notably, Apogee slashed its fiscal 2016 revenue growth outlook to the high-single-digits from the prior guidance of 10% to 15% due to construction site delays resulting in shift of some work from fiscal 2016 into fiscal 2017. However, the company retained its earnings per share outlook range of $2.10-$2.25 and expectation of double-digit growth in operating margin for fiscal 2016.

Tight schedules at construction sites in the U.S., negative impact of foreign exchange and weak foreign markets remain headwinds in the near term. The company also predicts tough comparison for the second half of fiscal 2016 with a strong second half in fiscal 2015.

Apogee remains concerned about the architectural glass segment. The segment will grow in the low-double-digits with mid-double-digits U.S. growth hindered by weak Brazilian market conditions. Architectural Framing Systems is expected to witness mid-single-digits growth and U.S. growth will be tempered by the slower Canadian business. Finally, Architectural Services is expected to see mid-single-digits growth in fiscal 2016.

Apogee expects Large-Scale Optical segment to grow in low- to mid-single-digits in fiscal 2016. The Large-Scale Optical Technologies' sales are highly dependent on a small number of customers. Furthermore, the segment depends on the strength of the retail picture framing market, which in turn is highly dependent on consumer confidence and the conditions of the U.S. economy.

In addition, the company's entry into the Brazilian architectural glass market exposes it to the soft economic conditions in the region as well as inherent risks associated with operations in foreign markets, including independent demand cycles, political issues, tax and other risks as well as exchange rate.

Moreover, this Zacks Rank #4 (Sell) stock has witnessed downward estimate revisions over the last 30 days. The Zacks Consensus Estimate for 2016 decreased roughly 2.3% to $2.17 per share.

Stocks that Warrant a Look

Some better-ranked stocks in the same space include ACCO Brands Corporation ACCO , AGCO Corporation AGCO and ABB Ltd. ABB . All these stocks carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AGCO CORP (AGCO): Free Stock Analysis Report

ABB LTD-ADR (ABB): Free Stock Analysis Report

APOGEE ENTRPRS (APOG): Free Stock Analysis Report

ACCO BRANDS CP (ACCO): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

APOG ABB ACCO AGCO

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More