Investors might want to bet on Apogee Enterprises (APOG) , as it has been recently upgraded to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.The power of a cha ...

Apogee Enterprises (APOG) closed the last trading session at $43.05, gaining 10.6% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $54 indicates a 25.4% upside potential.The average comprises three short-term price targets ranging from a low of $45.00 to a high of $63.00, with a standard deviation of $9. While the lowest estimate indicates an increase of 4.5% from the current price ...

Core Insights - The article emphasizes the importance of value investing as a successful strategy across various market conditions, focusing on undervalued stocks for potential profits [2] - Zacks has developed a Style Scores system to identify stocks with specific traits, highlighting Apogee Enterprises (APOG) and OI Glass (OI) as strong value stocks [3][6] Apogee Enterprises (APOG) - APOG holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential in the value investing category [3] - The company has a Price-to-Book (P/B) ratio of 1.89, which is lower than the industry average of 2.17, suggesting it may be undervalued [4] - APOG's Price-to-Cash Flow (P/CF) ratio is 7.97, compared to the industry's average of 9.03, further indicating potential undervaluation [5] - Over the past year, APOG's P/B has fluctuated between 1.68 and 3.78, with a median of 2.24, while its P/CF has ranged from 6.12 to 13.26, with a median of 8.39 [4][5] OI Glass (OI) - OI Glass has a Zacks Rank of 1 (Strong Buy) and a Value grade of A, making it another attractive option for value investors [6] - The stock is currently trading at a forward earnings multiple of 9.11 and a PEG ratio of 0.26, both lower than the industry averages of 9.48 and 0.27, respectively [6] - OI's P/B ratio stands at 1.82, also below the industry average of 2.17, indicating potential undervaluation [7] - In the past year, OI's P/B has varied from 1.04 to 1.96, with a median of 1.37 [7] Conclusion - Both Apogee Enterprises and OI Glass exhibit strong value characteristics, with favorable P/B and P/CF ratios compared to their respective industry averages, suggesting they are currently undervalued [8]

Core Viewpoint - Apogee Enterprises (APOG) shows potential for significant upside, with a mean price target of $54 indicating a 28.2% increase from the current price of $42.11 [1] Price Targets and Analyst Estimates - The mean estimate consists of three short-term price targets with a standard deviation of $9, where the lowest estimate is $45.00 (6.9% increase) and the highest is $63.00 (49.6% increase) [2] - A low standard deviation suggests strong agreement among analysts regarding the stock's price movement, which can be a starting point for further research [9] Earnings Estimates and Analyst Optimism - Analysts have shown growing optimism about APOG's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which correlates with near-term stock price movements [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 2.9%, with one estimate moving higher and no negative revisions [12] Zacks Rank and Investment Potential - APOG currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While the consensus price target may not be entirely reliable, the implied direction of price movement appears to be a good guide for potential upside [14]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Apogee Enterprises (APOG) as a strong value stock based on its financial metrics and rankings [2][3][6] Company Metrics - Apogee Enterprises (APOG) holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is among the strongest value stocks currently available [3] - APOG has a Price-to-Book (P/B) ratio of 1.93, which is lower than the industry average of 2.28, suggesting it may be undervalued [4] - The P/B ratio for APOG has fluctuated between a high of 3.78 and a low of 1.68 over the past year, with a median of 2.70 [4] - The Price-to-Cash Flow (P/CF) ratio for APOG is 8.14, which is also below the industry average of 9.50, further indicating potential undervaluation [5] - Over the past year, APOG's P/CF has ranged from a high of 13.26 to a low of 6.12, with a median of 9.05 [5] - These metrics contribute to the strong Value grade for APOG, suggesting it is likely undervalued at present [6]

Financial Performance - Consolidated net sales increased by 4.6% to $346.6 million, driven by $22.0 million of inorganic sales from the acquisition of UW Solutions[111] - Gross margin decreased to 21.7% from 29.8%, primarily due to $6.9 million in restructuring charges and higher aluminum costs[111] - SG&A expenses rose by $10.7 million to 19.7% of net sales, influenced by $8.4 million in restructuring charges and increased amortization from the UW Solutions acquisition[111] - Operating income declined to $6.9 million from $41.4 million, with operating margin decreasing by 1,050 basis points to 2.0%[111] - Adjusted EBITDA decreased to $34.4 million from $52.6 million, with adjusted EBITDA margin falling to 9.9% from 15.9%[111] - The company reported a net loss of $2.7 million compared to net earnings of $31.0 million in the same period last year[117] - Adjusted net earnings for the three months ended May 31, 2025, were $11.85 million, compared to $31.86 million for the same period in the previous year[136] - The adjusted diluted earnings per share for the three months ended May 31, 2025, was $0.56, compared to $1.44 for the same period in the previous year[136] Segment Performance - Architectural Metals segment net sales decreased by 3.4% to $128.6 million, while Architectural Services increased by 7.6% to $106.5 million[116] - Performance Surfaces segment net sales surged by 99.3% to $42.3 million, reflecting strong growth[116] - Net sales for the period were $128.6 million, a decrease from $133.2 million, primarily due to a less favorable mix, partially offset by increased volume[125] - Adjusted EBITDA was $9.4 million, or 7.3% of net sales, down from $23.8 million, or 17.9% of net sales, driven by higher aluminum costs and unfavorable productivity[125] Cash Flow and Financing - Net cash used in operating activities was $19.8 million for the first three months of fiscal 2026, compared to cash provided of $5.5 million in the prior year period, primarily due to lower net earnings[139] - Net cash provided by financing activities was $17.6 million for the first three months of fiscal 2026, compared to $4.9 million of net cash used in the prior year period[141] - As of May 31, 2025, outstanding borrowings under the term loan facility were $215.0 million, and under the revolving credit facility were $96.0 million[150] - The total amount available for revolving borrowings was $351.4 million as of May 31, 2025[151] - Future lease payments, excluding leases with initial terms of one year or less, were $71.8 million at May 31, 2025, with $12.5 million payable during the remainder of fiscal 2026[152] - The company had $16.0 million of open purchase obligations, with $7.8 million expected to be due during the remainder of fiscal 2026[153] Strategic Initiatives - The company expects Project Fortify Phase 2 to incur approximately $24 million to $26 million in pre-tax charges, with expected annualized pre-tax cost savings of $13 million to $15 million[107] - The company is reviewing its portfolio and may pursue acquisitions, geographic expansion, and divestitures as part of its business strategy[158] Tax and Compliance - The effective tax rate increased to 211.9% from 24.5%, primarily due to lower earnings before income taxes[117] - The company was in compliance with all covenants under the Credit Agreement as of May 31, 2025[146] Other Information - The company recognized a loss on extinguishment of debt of $0.5 million related to the previous revolving credit facility[145] - The Credit Agreement provides for an unsecured senior credit facility of up to $700 million, including a $450 million revolving credit facility[143] - At May 31, 2025, $1.2 billion of surety or performance bonds were outstanding, with $339.2 million in backlog[155] - The company believes its sources of liquidity will be adequate to meet both short-term and long-term capital expenditure needs[157] - There have been no material changes in related party transactions or critical accounting policies since the last annual report[159][160] - There have been no material changes in market risk since March 1, 2025[161]

Core Insights - Apogee Enterprises, Inc. (APOG) reported earnings per share (EPS) of 56 cents for the first quarter of fiscal 2026, exceeding the Zacks Consensus Estimate of 50 cents, although this represents a 61.1% decrease year over year [1] - The company generated revenues of $347 million, a 4.6% increase year over year, driven by the acquisition of UW Solutions, surpassing the Zacks Consensus Estimate of $324 million [2] - Despite revenue growth, gross profit fell 24% year over year to $75 million, with gross margin contracting to 21.7% from 29.8% in the prior year [2] Financial Performance - Cost of sales increased by 16.7% year over year to $271 million, contributing to the decline in gross profit [2] - Selling, general and administrative expenses rose 18.7% year over year to $68 million, leading to an operating income drop of 83.3% year over year to $6.9 million [3] Segment Performance - Architectural Metals segment revenues decreased 3.4% year over year to $129 million, with adjusted EBITDA falling to $9.4 million from $23.8 million [4] - Architectural Glass segment revenues fell 15.5% year over year to $73 million, with adjusted EBITDA around $13 million compared to $20 million in the previous year [5] - Architectural Services segment revenues improved 7.6% year over year to $106.5 million, but adjusted EBITDA decreased by 7.7% year over year to $6.1 million [5] - Performance Surfaces segment revenues surged 99.3% year over year to $42 million, reflecting the contribution from the UW Solutions acquisition, with adjusted EBITDA increasing to $7.96 million from $5.6 million [6] Cash Position and Debt - At the end of the first quarter of fiscal 2026, Apogee had cash and cash equivalents of $32.8 million, down from $41 million at the end of fiscal 2025 [7] - Cash used from operating activities was $19.7 million in the first quarter, compared to a cash inflow of $5.5 million in the prior year [7] - Long-term debt increased to $311 million from $285 million at the end of fiscal 2025 [8] Guidance - Apogee raised its guidance for net revenues to $1.40-$1.44 billion for fiscal 2026, up from the previous range of $1.37-$1.43 billion [9] - The updated adjusted EPS guidance is now $3.80-$4.20, an increase from the prior range of $3.55-$4.10, despite anticipated tariff pressures [9][10] Stock Performance - Apogee's shares have declined by 30.7% over the past year, contrasting with an 8.2% growth in the industry [11]

Group 1 - Apogee Enterprises (APOG) is expected to experience revenue and margin improvement, with sales gaining momentum in the latter half of fiscal 2026 [1] - The anticipated growth is supported by a rebound in the Metals segment, improving trends in Glass, and solid organic demand [1]

Core Viewpoint - Apogee Enterprises reported strong fiscal Q1 2026 earnings that initially boosted stock prices, but underlying issues, particularly in GAAP earnings and cash flow, raise concerns about the sustainability of these results [1][5][6] Financial Performance - Apogee's Q1 sales reached $346.6 million, exceeding analyst expectations by over $20 million [3] - Adjusted earnings for the quarter were $0.56 per share, which is 24% higher than anticipated [3] - The company forecasts annual sales of at least $1.4 billion and adjusted earnings between $3.80 and $4.20 per share, surpassing Wall Street's estimate of $3.72 [4] GAAP Earnings and Cash Flow - Despite strong adjusted earnings, Apogee reported a GAAP loss of $0.13 per share for Q1 [6] - The company experienced negative free cash flow of $27 million [6] Management Commentary - CEO Ty Silberhorn indicated that tariffs negatively affected Q1 results and emphasized the need for measures to mitigate their impact in the second half of the fiscal year [6]

Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $346.6 million, primarily driven by $22 million of inorganic sales from the acquisition of UW Solutions [12] - Adjusted EBITDA margin decreased to 9.9%, primarily due to a less favorable mix and higher aluminum costs [13] - Adjusted diluted EPS declined to $0.56, driven by lower adjusted EBITDA, higher interest expense, and a higher adjusted effective tax rate [13] Business Line Data and Key Metrics Changes - Metals segment net sales declined by 3.4%, with adjusted EBITDA margin decreasing to 7.3% due to a less favorable mix and higher aluminum costs [13] - Services segment achieved a 7.6% increase in net sales, marking its fifth consecutive quarter of growth, although adjusted EBITDA margin decreased to 5.7% due to higher tariff expenses [14] - Glass segment net sales declined, with adjusted EBITDA margin moderating from elevated levels due to reduced volume from lower end market demand [14] - Performance Surfaces segment saw increased net sales driven by inorganic contributions from UW Solutions, with adjusted EBITDA margin declining to 18.8% [14] Market Data and Key Metrics Changes - The revenue pipeline for Glass is improving, positioning the segment for growth beginning in Q3 and into Q4 [8] - Metals showed solid sequential improvement from Q4, with expectations for continued improvement in Q2 [8][41] Company Strategy and Development Direction - The company is focusing on operational improvements and tariff mitigation efforts, with aggressive actions under Project Fortify expected to drive annualized savings of $13 million to $15 million [7][10] - The company is actively pursuing M&A opportunities to diversify its business mix and enhance growth prospects [11][18] Management's Comments on Operating Environment and Future Outlook - Management raised the fiscal year outlook for net sales and adjusted diluted EPS, expecting a strong second half driven by Performance Surfaces and improved glass results [11][19] - Management acknowledged ongoing market challenges but emphasized a focus on controllable factors to improve outlook [10] Other Important Information - The company expects net sales for the fiscal year to be in the range of $1.4 billion to $1.44 billion, with adjusted diluted EPS between $3.8 and $4.2 [16] - The unfavorable EPS impact from tariffs is estimated to be $0.35 to $0.45, primarily affecting the first half of the fiscal year [16] Q&A Session Summary Question: Can you elaborate on the glass business and the revenue pipeline? - Management noted good visibility six months out and mentioned a pivot to smaller jobs to fill gaps in market softness, with increasing confidence in quote activity and award rates [24][25] Question: What are the segment margin targets for different business groups? - Management indicated that metals and services face headwinds from tariffs, and while they may struggle to reach the bottom of their target ranges, they expect improvement in the second half [30][31] Question: What is driving the sequential improvement in the metals segment? - Management highlighted operational improvements and regaining customer confidence as key factors driving month-to-month sequential improvement [41][43] Question: What is the status of Project Fortify Phase two? - Management confirmed minimal savings in Q1, with more significant savings expected to materialize in Q2 [48] Question: Can you quantify the EPS impact from tariffs in Q1? - Management stated that the impact was initially estimated at $0.45 to $0.55, but has been revised to $0.35 to $0.45 for the full year, with favorable trends noted in Q1 [49][50]