Shares of Apogee Enterprises, Inc. APOG slipped to a 52-week low of $38.81 on Jan 8, before closing a notch higher at $38.91 for the day.
What Led to the Drop?
Apogee’s share price has been declining since it reported third quarter fiscal 2016 results on Dec 17, 2015. Apogee’s revenues declined 2.5% year over year in the fiscal third quarter. The company slashed its revenue growth guidance to mid single digits from high single digits for fiscal 2016. On a segmental basis, Apogee guided revenues from architectural glass to grow in the high single digits to low double digits for the fiscal.
In addition, Architectural framing systems is expected to witness low-to-mid single-digit growth for the year. Weak Brazilian market conditions and a slower Canadian business are the near-term headwinds. Further, construction site delays are expected to hurt growth. The company’s businesses, mainly architectural glass and windows, generally have longer lead times which result in larger production gaps. This can be held partly responsible for the delay.
Meanwhile, Apogee remains cautious about contracting architectural market conditions. Further, Apogee’s large scale optical segment revenues declined 5% year over year in the fiscal third quarter due to a shift in the timing of customer orders. The company expects large-scale optical to grow in the low single digits in fiscal 2016. Furthermore, the segment depends on the strength of the retail picture framing market, which in turn is highly dependent on consumer confidence and the condition of the U.S. economy.
Zacks Rank & Key Picks
Apogee currently has a Zacks Rank #4 (Sell). Some better-ranked players in the industrial products sector are Harsco Corporation HSC, Astec Industries, Inc. ASTE and Albany International Corp. AIN. All three stocks carry a Zacks Rank #2 (Buy).
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