Shares of Apogee Rally 77% in a Year: Here's Why

Apogee Enterprises, Inc. APOG shares have shot up 77.4% in the past year against the industry's decline of 34.6%. Moreover, the S&P 500 has risen 8.2% over the same period.

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Let us take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.

What's Going in Apogee's Favor?

Solid Segment Performances: APOG's Architectural Glass segment witnessed solid year-over-year growth and margin expansion in the fourth quarter of fiscal 2024 despite significant supply-chain and inflation headwinds.
The segment is gaining on improved pricing and product mix, reflecting the company's strategic shift toward more premium products. The segment is also benefiting from an improved sales mix and productivity gains from its Lean program and higher pricing that helped offset inflation.
The company's Architectural Services segment is also gaining from a favorable mix of projects.
The Architectural Services segment's backlog was $808 million at the end of the fiscal fourth quarter compared with $777 million in the prior quarter's end. The backlog in the Architectural Framing segment amounted to $201 million, up from $184 million at the end of third-quarter fiscal 2024. This bodes well for the company.
Impressive Strategic Actions: Following a detailed strategic review of its business, the company has embarked on a plan to deliver profitable growth and improved returns. The strategy is centered on three pillars, including becoming the economic leader in its target markets, actively managing the portfolio to drive higher margins and Return on Invested Capital, and strengthening its core capabilities to enable profitable growth.
In 2022, it announced three-year financial goals, which include ROIC greater than 12%, an operating margin greater than 10% and revenue growth greater than 1.2 times growth of the non-residential construction market.
Backed by these initiatives, in fiscal 2024, ROIC hit 16.5%, surpassing the company's goal. The operating margin rose to 10.3%, which also exceeded the target of more than 10%.
Strong Balance Sheet: The company's solid liquidity position, coupled with a strong free cash flow, places it well to drive growth. It returned $33 million of cash to shareholders through share repurchases and dividend payments in fiscal 2024.
Apogee had cash and cash equivalents of $37.2 million at the end of fiscal 2024 compared with $19.9 million at the end of fiscal 2023. Cash generated from operating activities was $204 million in fiscal 2024 compared with the prior year's $103 million. The long-term debt was $62 million at the end of fiscal 2024 compared with $170 million at the end of fiscal 2023.

Stocks to Consider

Some better-ranked stocks from the Industrial Products sector are Intellicheck, Inc. IDN, Applied Industrial Technologies AIT and ACCO Brands Corporation ACCO. IDN currently sports a Zacks Rank #1 (Strong Buy), and AIT and ACCO carry a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Intellicheck's 2024 earnings is pegged at 2 cents per share. The consensus estimate for 2024 earnings has been unchanged in the past 60 days. The company has a trailing four-quarter average earnings surprise of 28.9%. IDN shares have gained 13.7% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 8.2%. The Zacks Consensus Estimate for AIT's 2024 earnings is pinned at $9.62 per share, which indicates year-over-year growth of 9.9%. Estimates have moved north by 2% in the past 60 days. The company's shares have gained 60.1% in the past year.
The Zacks Consensus Estimate for ACCO Brands' 2024 earnings is pegged at $1.07 per share. The consensus estimate for 2024 earnings has been unchanged in the past 60 days. The company has a trailing four-quarter average earnings surprise of 25.9%. ACCO shares have gained 1.5% in the past year.

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