Apogee Enterprises Earnings Preview

| About: Apogee Enterprises, (APOG)

Apogee Enterprises Inc. (NASDAQ:APOG) is scheduled to release its fourth quarter and full year 2012 financial results on Wednesday, April 11, after the market closes. The Zacks Consensus Estimate for the quarter is 7 cents per share.

The company reported a loss of 12 cents per share in the fourth quarter of fiscal 2011. The Zacks Consensus Revenue Estimate for the fourth quarter of fiscal 2012 is $168 million.

Third Quarter Synopsis

The company reported third quarter (ended November 26, 2011) adjusted earnings of 20 cents per share, beating the Zacks Consensus Estimate of 11 cents and exceeding the year-ago loss of 8 cents.

Revenues in the third quarter increased 19% year over year to $140 million, missing the Zacks Consensus Estimate of $170 million.

Top-line growth at Apogee, which competes with privately held AGC Flat Glass North America, Inc., Guardian Glass Company and Pilkington Group Limited, was driven by growth in Architectural Products and Services revenues.

Apogee expects revenues to increase 14% in FY12, up from its previous guidance of more than 10% year-over-year growth. The company also expects to generate positive cash flow from operations.

Agreement of Estimate Revisions

Out of the 3 analysts covering the stock, none have revised their estimates for the fourth quarter in either direction over the last 7 days or the preceding 30 days. A similar trend applies for fiscal 2012.

Magnitude of Estimate Revisions

The Zacks Consensus Estimates remained unchanged for both the fourth quarter and fiscal 2012 over the last 7 and 30 days. Apogee expects fiscal 2012 earnings per share of at least 7 cents. The Zacks Consensus Estimate of 12 cents per share for fiscal 2012 is well above the company’s guidance.

Earnings Surprise History

With respect to earnings surprise, Apogee has topped the Zacks Consensus Estimate in three of the last four quarters while it missed the Zacks Consensus Estimate on one occasion. The company has delivered an average positive earnings surprise of 35.61% over the preceding four quarters, implying that it has beaten the Zacks Consensus Estimate by that measure.

Our Recommendation

Apogee is working on increasing its market share. Future market share gains are likely to occur in the architectural glass market, which translate into selling greater amounts of energy-efficient products to office, health care, education and institutional markets.

To achieve these gains, the company is pursuing various strategies, such as identifying attractive international markets for architectural glass, upgrading its glass fabrication facilities to boost production, developing new energy-efficient products and systems for the green building trend and expanding its store front and standard window presence.

Apogee expects to remain profitable in the fourth quarter. However, the architectural project timing and large scale optical seasonality are likely to affect revenues negatively, bringing it down sequentially.

Apogee focuses in creating solutions for the design and development of value-added glass products, services, and systems. The company presently has two reportable segments: the Architectural segment and the Large-Scale Optical Technologies (LSO) segment.

Our long-term recommendation on Apogee remains Neutral. Currently, the stock retains a Zacks #3 Rank, implying a short-term Hold rating.