Apogee Enterprises (APOG) just went on a tear, surging over 20% to an all-time high after dropping a bombshell earnings report that had frothing at the friggin mouth to get in on action. 

In short, this boring architectural stock  that usually gets as much attention as a beige wall at a paint drying competition didn’t just meet expectations - it did a complete RKO on ‘em, posting stronger-than-anticipated margins and boosting its full-year earnings outlook. 

(Source: GuruFocus) 

Interesting, more details please…

Well, first off, Apogee’s secret sauce lies in a killer combo of improved pricing, a more profitable mix of projects in its architectural services unit (read: stopped signing sh*tty contracts), and trimming down material and insurance costs. Sure, sales might be down (they’re forecasting a 4-7% dip for the year), but who cares? When you’re making a ton of cash on fewer sales, that’s called efficiency, baby.

(Source: Giphy) 

In addition, Apogee has been cutting out lower-margin business lines like they’re dead weight, and it’s paying off bigly. Despite a 3.2% revenue drop in Q2, the company’s EPS still grew by nearly 6%, hitting $1.44 per share —easily beating analysts’ expectations of $1.23. 

As for guidance? Well, they’ve officially raised their full-year EPS guidance to a range of $4.90 to $5.20, up from the previous $4.65 to $5 range. This alone had Wall Street and investors throbbing with excitement as the stock ended up ripping 25% - posting it’s best single-day gain since the early pandemic days of March 2020 (contributing to fresh all-time highs as the stock is up 58% YTD). 

(Source: Market Screener) 

Now with that said, while some investors may be thinking this is just a flash in the pan earnings report - (especially considering Apogee’s main game is in non-residential construction—think office buildings, shopping centers, and other commercial properties that’s been rekt by remote work, higher interest rates, and Amazon friggin Prime) -  Apogee’s pivot to boosting profits over sales is what’s setting them apart. 

(Source: Giphy) 

Their operating margin for Q2 improved by 110 basis points to 12.6%, which is a big deal in the cutthroat world of construction materials.Plus, lower material costs and a more favorable project mix are giving Apogee some serious breathing room. The company’s also improving its cash flow, with $64 million year-to-date coming in from operations. Not too shabby for a company that’s technically shrinking in sales.

(Source: Guru Focus) 

What’s really interesting about Apogee and its earnings, is that even after the massive rally, the stock is now trading at about 16.7 times its revised EPS guidance. That’s not exactly screaming overvalued. If anything,in a world where people are paying $18 for a Big Mac, this stock might still be a bargain. Especially if they keep finding ways to print money while everyone else is just trying to stay afloat.

(Source: Giphy) 

So given all of this, what’s the takeaway here? Well simply put, with the company laser focused on margin expansion, Apogee’s future looks promising with $64 million in cash flow so far this year (indicating they’ve got the cash to back it up). 

Plus, the company’s raised guidance and strong Q2 performance are proof that it knows how to navigate a tough market. And with a P/E ratio that’s still not crazy high, there might be even more upside for investors who are willing to bet on this under-the-radar building supply star.

(Source: Giphy) 

In the end, maybe… just maybe, Apogee Enterprises'  is not as boring as most people think. Especially considering they aren’t just making windows and glass anymore - they’re cashin’ checks and snappin’ necks in an industry that’s experiencing one heck of a colossal clusterf**k in 2024. 

Now obviously, do what you will with this information, but in the meantime it might be worth keeping an eye on this company going forward. And as always, stay safe and stay frosty, friends! Until next time… 

P.S. Another winner! Friday morning's surprise alert ended the day with a nice 53% gain! Click here to upgrade to premium to make sure you don’t miss out on the next one.

Stocks.News holds no positions in companies mentioned in the article.