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Despite increased costs and labor shortage marring the near-term outlook of the Zacks Glass Products industry, it is poised to benefit from the rising demand for glass — both as a packaging option and for use in construction. This is backed by its endless recyclability and sustainability benefits. Growing demand for energy-efficient, smart windows or smart glass panels will be another catalyst for the industry going forward.
Companies like Xinyi Glass and Apogee Enterprises are poised to gain from their efforts to capitalize on this demand by boosting capacity and introducing innovative products to the market.
About the Industry
The Zacks Glass Products industry comprises companies that manufacture and sell glass products. One company produces glass containers for packaging beverages, food and pharmaceuticals. Another player in the industry offers coated and high-performance glass used in customized window and wall systems. The same company caters to the construction industry, ranging from commercial and multi-family residential to institutional buildings. It also provides coated glass for picture framing, wall décor and display applications.
One company offers smart glass windows using artificial intelligence to adjust and suitably increase access to natural light while minimizing heat and glare. Another company developed an electrokinetic technology that can be retrofitted on any glass, enabling buildings to cut energy consumption and save on heating and cooling costs, the need of the hour.
Major Trends Shaping the Future of the Glass Products Industry
Inflation & Labor Shortage Remain Near-Term Headwinds: The industry has been witnessing rising costs for transportation, chemical, fuel as well as supply-chain headwinds. The companies are seeing labor shortages for some positions and incurring steep labor costs to meet demand. Rising inflation, higher interest rates and construction costs could adversely impact demand for the industry’s products.
Glass Packaging Gains Popularity: Glass is increasingly becoming the packaging choice for customers, given its endless recyclability without a loss in quality. More than 80% of recycled bottles are used in making new bottles. This also helps negate the requirement for raw materials.
As consumers become more aware of their environmental footprint, a sharp spike in demand is noticed for refillable bottles, which offer the most sustainable and economical rigid packaging option. Manufacturers are focused on improving their products by reducing the weight of bottles for more convenient handling.
Premium cosmetic and beverage brands are opting for glass to differentiate their products through packaging and ensure quality maintenance. Per Statista, the global market value of glass containers and bottles is expected to surge to $96.4 billion in 2029 from $69.9 billion in 2022.
Demand in the Construction Sector Holds Promise: In recent years, the use of glass gained popularity in construction as a sustainable alternative to traditional building materials, including wood and bricks, owing to its cost-effectiveness, lightweight, immense strength and environmentally friendly factor. Glass increases the influx of natural light in the building, reduces energy consumption, minimizes carbon emissions and enhances the aesthetic appeal of structures.
Rising construction activities across the residential, commercial and industrial sectors are likely to fuel the glass products industry’s growth. Increasing investments in the renovation or modernization of the existing infrastructure will also drive the industry’s growth. Various governments are introducing favorable policies and granting incentives to promote green construction to minimize greenhouse emissions and energy consumption, which bode well for the industry.
Technological Innovation is the Key: Some players revolutionized the industry by bringing smart glass panels or smart windows to the market. These innovative products are designed to enable people to lead healthier and more productive lives by increasing access to daylight and views while minimizing glare and heat from the sun and keeping occupants comfortable. These products also help cut down on energy consumption from lighting and HVAC, thus reducing carbon emissions.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Glass Products industry is a three-stock group within the broader Industrial Products sector. The industry currently carries a Zacks Industry Rank #189, which places it in the bottom 25% of the 251 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates gloomy prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Despite bleak near-term prospects, we will present a few Glass Products stocks that you can add to your portfolio, given their prospects. But it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Versus S&P 500 & Sector
The Glass Products industry has underperformed the S&P 500 and the sector in the past year. The stocks in this industry have collectively declined 12% against the Industrial Products sector’s rise of 16.8%. The S&P 500 composite has risen 25.8% during the said time frame.
Industry's Current Valuation
Based on the forward 12-month EV/EBITDA ratio, a commonly-used multiple for valuing Glass Products companies, we see that the industry is currently trading at 4.17X compared with the S&P 500’s 14.28X and the Industrial Products sector’s 19.30X.
Over the last five years, the industry traded as high as 7.17X and as low as 4.14X, the median being 5.38X.
2 Glass Products Stocks to Keep an Eye on
Apogee: The company’s first-quarter fiscal 2025 results showcased a solid 37% year-over-year improvement in earnings. APOG’s efforts to improve efficiency, cost management and productivity gains drove the significant expansion in margins in the quarter. Apogee raised its adjusted earnings per share guidance for the fiscal 2025 to $4.65-$5.00 from the previous $4.35-$4.75. The midpoint of the new range indicates year-over-year growth of 1%.
In January 2024, APOG announced strategic actions (referred to as Project Fortify) to streamline its business operations, improve cost structure, and better position the company for profitable growth. Based on these developments, APOG’s shares have gained 25.2% year to date. Project Fortify is expected to deliver annualized cost savings of $12-$14 million. Approximately 60% of these savings will be realized in fiscal 2025 and the rest in fiscal 2026. APOG’s solid liquidity position and strong free cash flow place it well for growth.
The Zacks Consensus Estimate for Apogee’s current-year earnings moved 7% north in the past 90 days. The consensus mark indicates year-over-year growth of 1.9%. This Minneapolis, MN-based entity has a trailing four-quarter earnings surprise of 23.4%, on average. Apogee currently carries a Zacks Rank #3 (Hold).
Xinyi Glass: The company is expected to benefit from the ongoing improvement in demand for architectural and automobile glass products in its overseas markets. It continues to boost its overseas sales portfolio and expand overseas businesses to consolidate its leadership and competitive advantages in the industry.
Xinyi Glass continues investing in research, and developing and launching a range of unique glass products with different colors, thicknesses, special coating materials, high value-added features and parts, accessories and specialties. Focus on cost control, improving supply-chain flow and efforts to re-engineer its production process by adding automation features and a centralized control management system have enhanced its productivity and yield rate. The company’s efforts to reduce carbon emissions are also commendable. XYIGF shares have declined 22.5% year to date.
The Zacks Consensus Estimate for the Kwun Tong, Hong Kong-based company’s fiscal 2024 earnings has been unchanged in the past 90 days. The estimate indicates year-over-year growth of 12.5%. XYIGF currently has a Zacks Rank #3.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Xinyi Glass and Apogee
For Immediate Release
Chicago, IL – September 18, 2024 – Today, Zacks Equity Research discusses Xinyi Glass (XYIGF - Free Report) and Apogee Enterprises (APOG - Free Report) .
Industry: Glass
Link: https://www.zacks.com/commentary/2337079/2-glass-products-stocks-poised-to-navigate-industry-challenges
Despite increased costs and labor shortage marring the near-term outlook of the Zacks Glass Products industry, it is poised to benefit from the rising demand for glass — both as a packaging option and for use in construction. This is backed by its endless recyclability and sustainability benefits. Growing demand for energy-efficient, smart windows or smart glass panels will be another catalyst for the industry going forward.
Companies like Xinyi Glass and Apogee Enterprises are poised to gain from their efforts to capitalize on this demand by boosting capacity and introducing innovative products to the market.
About the Industry
The Zacks Glass Products industry comprises companies that manufacture and sell glass products. One company produces glass containers for packaging beverages, food and pharmaceuticals. Another player in the industry offers coated and high-performance glass used in customized window and wall systems. The same company caters to the construction industry, ranging from commercial and multi-family residential to institutional buildings. It also provides coated glass for picture framing, wall décor and display applications.
One company offers smart glass windows using artificial intelligence to adjust and suitably increase access to natural light while minimizing heat and glare. Another company developed an electrokinetic technology that can be retrofitted on any glass, enabling buildings to cut energy consumption and save on heating and cooling costs, the need of the hour.
Major Trends Shaping the Future of the Glass Products Industry
Inflation & Labor Shortage Remain Near-Term Headwinds: The industry has been witnessing rising costs for transportation, chemical, fuel as well as supply-chain headwinds. The companies are seeing labor shortages for some positions and incurring steep labor costs to meet demand. Rising inflation, higher interest rates and construction costs could adversely impact demand for the industry’s products.
Glass Packaging Gains Popularity: Glass is increasingly becoming the packaging choice for customers, given its endless recyclability without a loss in quality. More than 80% of recycled bottles are used in making new bottles. This also helps negate the requirement for raw materials.
As consumers become more aware of their environmental footprint, a sharp spike in demand is noticed for refillable bottles, which offer the most sustainable and economical rigid packaging option. Manufacturers are focused on improving their products by reducing the weight of bottles for more convenient handling.
Premium cosmetic and beverage brands are opting for glass to differentiate their products through packaging and ensure quality maintenance. Per Statista, the global market value of glass containers and bottles is expected to surge to $96.4 billion in 2029 from $69.9 billion in 2022.
Demand in the Construction Sector Holds Promise: In recent years, the use of glass gained popularity in construction as a sustainable alternative to traditional building materials, including wood and bricks, owing to its cost-effectiveness, lightweight, immense strength and environmentally friendly factor. Glass increases the influx of natural light in the building, reduces energy consumption, minimizes carbon emissions and enhances the aesthetic appeal of structures.
Rising construction activities across the residential, commercial and industrial sectors are likely to fuel the glass products industry’s growth. Increasing investments in the renovation or modernization of the existing infrastructure will also drive the industry’s growth. Various governments are introducing favorable policies and granting incentives to promote green construction to minimize greenhouse emissions and energy consumption, which bode well for the industry.
Technological Innovation is the Key: Some players revolutionized the industry by bringing smart glass panels or smart windows to the market. These innovative products are designed to enable people to lead healthier and more productive lives by increasing access to daylight and views while minimizing glare and heat from the sun and keeping occupants comfortable. These products also help cut down on energy consumption from lighting and HVAC, thus reducing carbon emissions.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Glass Products industry is a three-stock group within the broader Industrial Products sector. The industry currently carries a Zacks Industry Rank #189, which places it in the bottom 25% of the 251 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates gloomy prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Despite bleak near-term prospects, we will present a few Glass Products stocks that you can add to your portfolio, given their prospects. But it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Versus S&P 500 & Sector
The Glass Products industry has underperformed the S&P 500 and the sector in the past year. The stocks in this industry have collectively declined 12% against the Industrial Products sector’s rise of 16.8%. The S&P 500 composite has risen 25.8% during the said time frame.
Industry's Current Valuation
Based on the forward 12-month EV/EBITDA ratio, a commonly-used multiple for valuing Glass Products companies, we see that the industry is currently trading at 4.17X compared with the S&P 500’s 14.28X and the Industrial Products sector’s 19.30X.
Over the last five years, the industry traded as high as 7.17X and as low as 4.14X, the median being 5.38X.
2 Glass Products Stocks to Keep an Eye on
Apogee: The company’s first-quarter fiscal 2025 results showcased a solid 37% year-over-year improvement in earnings. APOG’s efforts to improve efficiency, cost management and productivity gains drove the significant expansion in margins in the quarter. Apogee raised its adjusted earnings per share guidance for the fiscal 2025 to $4.65-$5.00 from the previous $4.35-$4.75. The midpoint of the new range indicates year-over-year growth of 1%.
In January 2024, APOG announced strategic actions (referred to as Project Fortify) to streamline its business operations, improve cost structure, and better position the company for profitable growth. Based on these developments, APOG’s shares have gained 25.2% year to date. Project Fortify is expected to deliver annualized cost savings of $12-$14 million. Approximately 60% of these savings will be realized in fiscal 2025 and the rest in fiscal 2026. APOG’s solid liquidity position and strong free cash flow place it well for growth.
The Zacks Consensus Estimate for Apogee’s current-year earnings moved 7% north in the past 90 days. The consensus mark indicates year-over-year growth of 1.9%. This Minneapolis, MN-based entity has a trailing four-quarter earnings surprise of 23.4%, on average. Apogee currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Xinyi Glass: The company is expected to benefit from the ongoing improvement in demand for architectural and automobile glass products in its overseas markets. It continues to boost its overseas sales portfolio and expand overseas businesses to consolidate its leadership and competitive advantages in the industry.
Xinyi Glass continues investing in research, and developing and launching a range of unique glass products with different colors, thicknesses, special coating materials, high value-added features and parts, accessories and specialties. Focus on cost control, improving supply-chain flow and efforts to re-engineer its production process by adding automation features and a centralized control management system have enhanced its productivity and yield rate. The company’s efforts to reduce carbon emissions are also commendable. XYIGF shares have declined 22.5% year to date.
The Zacks Consensus Estimate for the Kwun Tong, Hong Kong-based company’s fiscal 2024 earnings has been unchanged in the past 90 days. The estimate indicates year-over-year growth of 12.5%. XYIGF currently has a Zacks Rank #3.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.