It's been nearly two years since the last time glassmaker Apogee Enterprises (NASDAQ:APOG) missed an earnings estimate set for it by Wall Street's Wise Men. How will the company celebrate its anniversary this coming Wednesday morning?

What analysts say:

  • Buy, sell, or waffle? Only two analysts follow little Apogee, but both give it their highest buy ratings.
  • Revenues. They expect to see Apogee report 7% better sales for Q1 2007, at $175.6 million.
  • Earnings. Also expected are 21% better profits, at $0.17 per share.

What management says:
Here's what CEO Russell Huffer had to say two months ago about tomorrow's results: "We are looking forward to another year of improved performance. . Our strong architectural backlog of more than $300 million in work, which is almost half of our expected fiscal 2007 architectural revenues, gives us confidence in our outlook for the year."

As for what that outlook is, Huff expects Apogee to improve operating margins in this segment. That's great news for shareholders, because the architectural segment is Apogee's largest by far (comprising 83% of revenues), although it generates only 61% of the firm's operating profits at present. Huff also expects "solid performance" from the firm's second-largest revenue- and profits- generator, large-scale optical glass (used for picture framing, for example).

What management does:
Marrying actions to words (and inspiring confidence in those words), Apogee has been doing just this. I know I'm tempting fate by saying this, and just begging tomorrow's results to prove me wrong, but I see a clear trend here toward the company expanding margins on each of the gross, operating, and net profitability levels. Combine that with modest growth in sales, and the result is the explosive profits growth you see reflected in the analyst estimates above.

Margins %

11/04

2/05

5/05

8/05

11/05

2/06

Gross

17.6

18.1

18.2

18.4

18.2

18.7

Op.

2.2

3.6

3.9

4.5

4.4

4.8

Net

1.1

2.6

2.7

2.8

3.2

3.4
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Reviewing Huff's predictions for this new fiscal year, one thing jumped out at me several times: the continued weakness of the firm's auto glass segment. Sales in this division are expected to be flat year over year, and Huff only hoped for break-even profitability in the year to come. As well as Apogee is doing overall, this Fool still wonders whether Apogee might not rise to even higher heights if it could just cut itself free of this ballast.

To truly enhance shareholder value, companies need to concentrate on what they're good at. For all the things at which Apogee unarguably excels, making money from replacing cracked windshields doesn't appear to be one of them.

Competitors:

  • PPG Industries (NYSE:PPG)

Creditors:

  • JPMorgan Chase (NYSE:JPM)
  • Bank of America (NYSE:BAC)
  • Wells Fargo (NYSE:WFC)

JPMorgan Chase, Bank of America, and PPG Industries are Motley Fool Income Investor picks. Take the newsletter dedicated to dividend-payers for a 30-day free spin.

Fool contributor Rich Smith does not own shares of any company named above.