Here’s why you should own Apogee (APOG) in your portfolio right now


apogee company APOG has delivered sequential improvement in margins and adjusted earnings per share (EPS) over the past six quarters, which is impressive given the ongoing supply chain disruptions and inflationary pressures. This was helped by continued strong performances in Architectural Services and Framing Systems, which are likely to continue the momentum. Pricing measures and benefits from completed restructuring measures will also drive APOG’s growth.

Apogee currently has a Zacks Rank #3 (Hold) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) , a Zacks Rank #2 (Buy) or a Zacks Rank #3 offer the best investment opportunities. You can see the full list of today’s Zacks #1 Rank stocks can be found here.

Let’s dive deeper and analyze the factors that make this stock worth owning right now.

Solid Q3 results: APOG reported adjusted earnings per share of $1.07 for the third quarter of fiscal 2023 (ended November 26, 2022), up 69.8% from 63 cents in the year-ago quarter. Revenue for the quarter was $368 million, up 10.2% year over year. This growth was supported by solid improvements in the Architectural Framing Systems and Architectural Glass segments.

Positive outlook for FY23: Apogee expects fiscal 2023 adjusted earnings per share to be in the range of $3.90 to $4.05, supported by positive results for the third quarter of fiscal 2023. Midpoint of revised guidance shows 60% growth over adjusted Earnings per share of $2.48 for fiscal 2022. The company expects full-year 2023 revenue growth of 10%, driven primarily by growth in Architectural Framing Systems.

Positive earnings surprise story: APOG has an average four-quarter earnings surprise of 45.9%.

Projections for healthy growth: The Zacks Consensus estimate for Apogee’s fiscal 2023 revenue is currently $3.96, indicating a 7% year-over-year increase. The earnings estimate has remained stable over the past two months.

Growth drivers present: The architectural glass segment is growing due to better pricing and product mix, reflecting the company’s strategic shift towards premium products. The segment’s operating margins improved for five consecutive quarters sequentially. This was due to an improved revenue mix and productivity gains from the Lean program, as well as higher pricing, which helped offset the impact of inflated costs.

The company also expects order backlog growth in fiscal 2023, supported by a strong project pipeline and improving order trends. That should drive the company’s top line and bottom line for at least the next two years. The Company’s segments have the potential to increase market share, expand into new regions and markets, and introduce new products. The company completed the realignment of Framing Systems to support its go-to-market approach and increase focus on target markets. This will reduce the overall cost structure of the segment.

Apogee is involved in various projects across a range of sectors including healthcare, education, government and multi-family housing and a growing home renovation business. The company is experiencing strong demand from the new construction sector. In addition, the various government stimulus measures are supporting the company’s end-of-construction markets.

value for money

Apogee’s shares are up 9.3% over the past six months, compared to industry growth of 25.8%.

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Stocks to consider

Some better rated stocks from the industrial products sector are OI glass OI, Tenaris TS and Rockwell Automation ROOK. OI and TS currently have a Zacks Rank #1 (Strong Buy) and ROK has a Zacks Rank #2 (Buy).

OI Glass has an average earnings surprise over the last four quarters of 16.4%. Zacks consensus estimate for OI’s 2023 earnings is set at $2.57 per share, up 11.7% from the value reported last year. The consensus estimate for 2023 earnings has moved up 16% over the past 60 days. OI shares are up 53.1% over the past six months.

Tenaris has an average four-quarter earnings surprise of 11.5%. The Zacks Consensus estimate for TS’ 2023 earnings is $6.12 per share, up 41.3% from the figure reported last year. The consensus estimate for 2023 earnings has moved north by 18.1% over the past 60 days. Its shares are up 12.8% over the past six months.

The Zacks Consensus estimate for Rockwell Automation’s earnings per share for fiscal 2023 is set at $11.24, up 18.4% year over year. The consensus estimate for fiscal 2023 earnings is up 6% over the past 60 days. ROK has a four-quarter trailing average earnings surprise of 6.9%. Its shares are up 15.2% over the past six months.

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Rockwell Automation, Inc. (ROK): Free Stock Research Report

Apogee Enterprises, Inc. (APOG): Free Stock Research Report

Tenaris SA (TS) : Free Stock Research Report

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