Gediminas Jasionis

How is Apogee Enterprises, Inc. (NASDAQ: APOG) coping with the crisis?

by Gediminas Jasionis November 24, 2008
apogee_logo.jpgAt a first glance Apogee Enterprises, Inc. (NASDAQ: APOG) might seem to be among companies that are likely to survive the crisis without getting a serious beating. Apogee operates as a provider of glass products for construction, optics and other market segments. This market is unlikely to take a direct hit from the crisis and thus the company should be able to recover quicker after the crisis.

The company is also a regular dividend payer which makes its stock look even more attractive. And with the company's management considering repurchases of their stock, it seems they are sure the price will go up in the future, and this is an opportune moment for them to save some money on that.

The company has rather strong fundamentals. They're able to generate profit during harsh economic conditions. Their 5 year ROE (return on equity) of 11.75 looks pretty much in place for their industry. On the other hand, Apogee operates on rather low profit margin of 5.1%. The stock has a high volatility compared to the market (it has a beta value of 2.35), which means it is riskier. Also, their cash flow has been negative for two consecutive quarters, which is the sign of crisis knocking at the company's door.

apog chart

So, with more analysis, this stock seems a bit controversial. It looks like it could become winner once the crisis is over, but currently it is hard to determine if the company will be able to withstand the economic downturn in their current shape. Further, unfavorable market conditions are driving the stock down, making it of less interest to investors.

All in all, there is long term investment potential for those who are willing to take the risk on their investment. The stock is actually way undervalued so there is potential for gain, but there is also risk that the company's performance will fall to meet the current stock performance. I would suggest waiting unril their next quarterly results are announced to get a better view of how Apogee is coping with the crisis and then decide whether the stock is really a bargain.


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