It has been about a month since the last earnings report for Apogee Enterprises (APOG Quick QuoteAPOG - Free Report) . Shares have added about 14.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Apogee Enterprises due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Apogee's Shares Gain as Q3 Earnings Beat Estimates

Apogee reported third-quarter fiscal 2021 (ended Nov 28, 2020) adjusted earnings per share of 90 cents on Dec 18. The bottom line beat the Zacks Consensus Estimate of 67 cents and improved 58% year over year. The company’s cost reduction efforts were instrumental in driving the improved performance despite COVID-19 pandemic induced challenges, and weak conditions in the architectural end markets.

Including one-time items, the company delivered earnings per share of $1.42 compared with 57 cents in the year-ago quarter.

Apogee generated revenues of $313.6 million during the quarter. which missed the Zacks Consensus Estimate of $325 million. The top line declined 7% year over year as growth in Architectural Services and Large-Scale Optical segments were offset by lower volumes in Architectural Framing Systems and Architectural Glass due to the coronavirus pandemic.

Operational Update

Cost of sales in the fiscal third quarter was down 7% year over year to $244 million. Gross profit declined 6% year over year to $70 million. Gross margin came in at 22.2%, reflecting an expansion of 20 basis point year over year.

Selling, general and administrative (SG&A) expenses plunged 62% year over year to $19.8 million. Adjusted operating income surged 46% year over year to $31.8 million. Operating margin in the reported quarter was 10.1% compared with the prior-year quarter’s 6.4%.

Segment Performance

In the fiscal third quarter, revenues in the Architectural Framing Systems segment slid 17% year over year to $137 million on lower order volume for short lead-time products and COVID-related project delays. The segment’s operating income increased 14% year over year to around $7 million as benefits from cost reductions helped negate the impact of lower revenues.

Revenues in the Architectural Glass Systems segment dropped 5% year on year to $85 million, due to COVID and market-related project delays. The segment reported an operating profit of $10.8 million compared with the year-ago quarter’s $4.1 million.

Revenues in the Architectural Services segment increased 11% year over year to $77 million, as the segment executed projects in its backlog. The segment’s operating profit jumped 31% year over year to $8.5 million courtesy of solid strong project execution.

Revenues in the Large-Scale Optical Technologies segment rose 4% year over year to $25.3 million on higher volumes owing to a substantial increase in customer demand following the segment’s COVID-related shutdown earlier in the year. The segment reported an adjusted operating profit of $6.8 million in the fiscal third quarter, flat compared with the prior-year quarter.

Backlog

The Architectural Services segment’s backlog decreased to $597 million from $665 million at the end of second-quarter fiscal 2021. Backlog in the Architectural Framing segment amounted to $408 million, up from $404 million at the end of second-quarter fiscal 2021.

Financial Position

Apogee had cash and cash equivalents of $55.4 million at the end of third-quarter fiscal 2021 compared with the $19.4 million at the end of fiscal 2020. Cash generated from operating activities were $120 million in the nine-month period ended as of Nov 28, 2020 compared with $53.6 million in the comparable period in fiscal 2020.

Long-term debt was around $166.5 million as of Nov 28, 2020 compared with $212.5 million as of Feb 29, 2020. During third-quarter fiscal 2021, the company amended its credit agreement to extend the maturity of its unsecured $150 million term loan for three years to June 2024. This extension is expected to benefit annual interest expense by $0.5 million.

Apogee has resumed share repurchases and bought 621,000 shares for $16 million in the quarter under review. So far this fiscal, Apogee has returned $35 million of cash to shareholders through dividends and share repurchases.

Fiscal 2021 Guidance

Given the coronavirus pandemic-related uncertainties in the end markets and economy, Apogee has refrained from issuing any financial guidance for fiscal 2021. However, the company anticipates revenues to be impacted in the fourth quarter due to the continued project delays and soft market conditions.

Meanwhile, it continues to aggressively manage costs and improve execution across the business. It remains on track to achieve its full-year cost reduction goal of more than $40 million. Apogee has initiated an effort to reduce its fixed cost base, which should lead to incremental cost savings in fiscal 2022.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Apogee Enterprises has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Apogee Enterprises has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.