Glass products maker Apogee Enterprises
[Cue audio of crickets chirping.]
What? Nobody's interested in windows and windshields?
Well, even if you aren't, you should be interested in this one. So far this year, little Apogee has boosted its earnings by 26% over its first-half 2004 numbers. And if the pair of analysts who follow the company know what they're talking about, it's poised to report a 30% increase in earnings tomorrow, despite growing revenues just 13% against the year-ago period. Not too shabby for a refined-sand company, eh? And when you consider that its nearest competitor -- PPG Industries
Top all of that off with the analysts' belief that Apogee will grow earnings by an astounding 77% year over year in the fourth quarter, and we could be looking at a full-year result that beats Apogee's 2004 numbers by a whopping 48%. Then again, that's just the analysts' view. The company itself has adopted the more conservative stance that it will grow revenue about 10% and earnings "only" 38% or so for the year.
Whoever proves right, there's no arguing that this looks to be shaping up into a very good year for Apogee -- with one caveat.
In this Fool's view, the main issue that should concern Apogee investors is the company's accounts receivable. It has been 18 months since Apogee last had a quarter in which its accounts receivable numbers compared favorably with its previous-year comps. Ideally, we'd like to see that change with Wednesday's report. On the other hand, the usual companion to weak receivables performance -- rising inventories -- is happily absent. Looking as far back as November 2002, it seems that Apogee's inventory levels rarely vary much from one quarter to the next, always sitting somewhere in the neighborhood of $35 million in value. I'd expect to see just about the same thing tomorrow.
All in all, then, some minor quibbling about A/R aside, I suspect that Apogee shareholders will be feeling just fine tomorrow afternoon.
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Fool contributor Rich Smith does not own shares of either company named above.