Apogee Enterprises, Inc. APOG is scheduled to release third-quarter fiscal 2016 financial results on Dec 16, 2015. Last quarter, the company delivered an earnings surprise of 0.00%. Let’s see how things are shaping up for this announcement.
Factors at Play
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 being countered by weak Brazilian market conditions. 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 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.
Earnings Whispers?
Our proven model does not conclusively show that Apogee is likely to beat estimates 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: Apogee’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are at 63 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:
Brady Corp. BRC has an Earnings ESP of +4.55% and a Zacks Rank #1.
Ideal Power, Inc. IPWR with an Earnings ESP of +3.13%, carries a Zacks Rank #3.
MRC Global Inc. MRC holds an Earnings ESP of +66.67% and a Zacks Rank #3
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