Shares of Apogee Enterprises climbed to a new 52-week high in September after reporting its forecast–topping second quarter results.
Shares of Apogee Enterprises (APOG) climbed to a new 52-week high in September after reporting its forecast–topping second quarter results. It raised earnings guidance for fiscal 2013, sparking upward revisions from analysts that boosted the Zacks Consensus Estimate.
Apogee reported solid second-quarter fiscal 2013 results on September 19, including earnings per share of 17 cents that reversed a loss of 6 cents a year ago. The result comfortably beat the Zacks Consensus Estimate of 9 cents USD by nearly 90%, marking the sixth positive surprise over the last seven quarters.
Founded in 1949, Apogee Enterprises is a glass manufacturer specializing in technologies for the design and development of value-added glass products, services and systems. The company’s larger architectural segment is engaged in designing, engineering, fabricating, installing and renovating windows and walls of glass that make up the outside of the commercial buildings.
According to the company’s result report, revenues rose 6% year-over-year to 175.9 million USD, driven by growth across the board. Gross margins improved to 20.5% from 15.7% a year ago.
Revenues from the core architectural products and services segment rose 5% year-over-year to 156.4 million USD, fueled by share gains in the storefront and installation businesses. The segment returned to profit in the quarter. Moreover, the division’s backlog climbed 32% and reached its highest level in twelve quarters.
Sales from the large-scale optical technologies division surged 19% to 19.6 million USD. The improvement stemmed from higher value-added glass and acrylic mix across picture framing sectors.
Apogee raised its earnings guidance for fiscal 2013 to between 56 and 64 cents USD per share from the previous guidance of 48 to 58 cents USD. It expects revenue growth in the mid single-digits, driven by share gains in the architectural businesses.
For fiscal 2013, all three estimates have been revised higher in the last 30 days, pushing the Zacks Consensus Estimate upward by 18% to 66 cents USD a share. This reflects an estimated annualized growth of roughly 198.5%.
All three estimates have moved higher for fiscal 2014 as well, sending the Zacks Consensus Estimate up by 20% to 95 cents USD per share. This represents an estimated year over year growth of 44.7%.
Apogee’s valuation appears expensive on a P/E basis. Its trailing twelve months P/E of 36.39 times is much higher than the peer group average of 6.56 times. Moreover, the stock is currently trading at a forward P/E of 29.92 times, which is well above the peer group average of 12.45 times. The price-to-book of 1.72 times is in line with the peer group average. Given the robust earnings trajectory, the premium valuation should not scare investors away.
Technical indicators show that Apogee has been above its 200-day moving average since late 2011. Moreover, after a series of peaks and troughs, the stock is trading above its 50-day moving average of late. Notably, following a golden crossover in early 2012, the 50-day moving average continues to read higher than the 200-day moving average, manifesting the bullish trend.
This Zacks #2 Rank (“Buy”) fits the bill for aggressive growth investors, given its rising estimates, solid double-digit earnings growth projection for this year, favorable building industry trends, strong architectural backlog and the healthy performance of its framing glass and acrylic business.