$6.05
$56.75
bear $6.05
base $44.23
bull $56.75
margin of safety $26.00
market price* $41.38
Apogee Enterprises makes and installs the glass, aluminum framing, curtainwall and coated surfaces used on commercial, institutional and specialty buildings, mostly in the United States. In fiscal 2026 (year ended February 28, 2026) sales were $1,404.7M across Architectural Metals ($504.0M), Architectural Services ($439.2M, installation and facade contracting), Architectural Glass ($283.7M) and Performance Surfaces ($198.0M). Net income was $54.1M, operating cash flow $122.5M and capital spending $27.3M. Demand follows non-residential construction, and results swing with project timing, aluminum costs and tariffs. In the first half of fiscal 2027 (to August 29, 2026) sales were $733.8M, up 4.1%, net income $33.9M, and operating cash flow $43.3M versus $37.3M a year earlier. How we measure earnings. We start from operating cash flow, strip out swings in receivables, inventories, contract balances and payables, and then charge stock compensation and the capital spending needed to keep the plants running (only spending tied to sales growth is excluded, which matters little here). Because Apogee carries debt, we add back the cash interest it pays to see what the operations themselves produce, and subtract the debt separately. On that basis fiscal 2021 to 2026 produced $88.9M, $78.3M, $106.7M, $103.6M, $113.4M and $110.4M. We use the median, $105.1M a year, as the normal level of the business as it stood before this year's purchases. That window includes the pandemic year and a soft year; we leave out fiscal 2017 to 2020 because capital spending then ran $51M to $68M a year, nearly double the recent pace. Fiscal 2024 cash flow of $204.2M was inflated by a $56.9M release of working capital, which we removed. Intangible amortization ($10.6M in fiscal 2026) is added back as a sunk acquisition cost; because no case credits organic growth and every case fades to zero, those wasting assets are not treated as permanent. Growth check. Business cash flow in fiscal 2026 fell 2.7% (from $113.4M to $110.4M). Our base case starts at $105.1M for the existing business, below what fiscal 2026 delivered, so no rebound is assumed; the only additions are from the two businesses bought this year. We credit no organic growth in any case: sales have stayed between $1.2B and $1.44B for nine years, and while the Architectural Services backlog rose to $833.0M at August 29, 2026 from $693.8M at fiscal year-end, management describes that market as highly competitive (segment margin 5.8%), so a bigger backlog has not shown it can lift earnings. Left out: construction recovery, pricing, margin expansion, management's synergy targets and future acquisitions. Acquisitions. Kalwall (translucent daylighting panels) closed July 1, 2026; Apogee paid $99.6M in cash net of cash acquired and has described total consideration of up to $115M, so we treat the remaining $15.4M as owed. Kalwall contributed $16.4M of sales in its first two months and management says it is tracking toward about $85M of first-year sales at about a 15% EBITDA margin. GroGlass (anti-reflective and specialty glass, Europe) was agreed for up to 62.5M euros (about $72.5M) cash plus an earnout of up to 10M euros (about $11.6M), closing expected in the fiscal third quarter; management projects about $30M of sales at about a 25% EBITDA margin. Neither business has an audited record in Apogee's filings, so we credit only part of the implied cash flow: Kalwall $3M, $6M and $8M a year and GroGlass $2M, $4M and $5.5M in the bear, base and bull cases. Debt. At August 29, 2026 Apogee owed $335.5M ($206.5M term loan and $129.0M on its revolver) against $36.5M of cash. Adding the $72.5M GroGlass price, its $11.6M earnout and the $15.4M of remaining Kalwall consideration gives net debt of about $398.1M ($19.05 per share on 20.9M diluted shares). The facility is unsecured and floating, at a weighted 4.45%, close enough to our rate that no adjustment is made; it matures July 19, 2029 and requires leverage below 3.5 times EBITDA and interest coverage above 3.0 times. Leverage stood at 1.7 times after the purchases. Cash interest is now running about $15M to $22M a year. Bear case: $6.05 per share. Apogee goes through a downturn like the one it lived through in fiscal 2010 to 2011, when sales fell 16% in a year (from $696.7M to $582.8M) and operating cash flow went from $97.2M to minus $8.0M, with installation contracts losing money. We model business cash flow of $85M and $80M in the next two years, then $35M, minus $5M and $20M through the trough, $50M in recovery, and then the fiscal 2022 low of $78.3M less $7M of extra capital spending (management guides $35M to $40M a year versus the $32M window average), plus $5M from the two acquisitions: $76.3M a year for four years, fading to zero over the following ten. In the trough, cash flow falls below the interest bill for two years and debt of about $400M against depressed EBITDA would breach the 3.5 times leverage covenant, so we charge a further $45M for covenant relief, higher borrowing costs or dilution. The business is worth $569.5M ($27.25 per share), it owes $443.1M including that charge ($21.20), leaving $126.4M ($6.05). Base case: $44.23 per share. Cash flow of $115.1M a year ($105.1M for the existing business plus $10M from Kalwall and GroGlass), with one ordinary two-year slowdown at $85M, then fading to zero over 15 years after year 15. The flat stretch rests on nine years of sales and cash flow inside a fixed band from plants already in place; it is not extended further because the business is exposed to construction cycles and aluminum prices. The business is worth $1,322.6M ($63.28 per share), it owes $398.1M ($19.05), leaving $924.5M ($44.23). Bull case: $56.75 per share. Cash flow repeats fiscal 2025's best recent year of $113.4M, plus $13.5M from the acquisitions, $126.9M a year for 20 years with a single soft year, then fading to zero over ten. The business is worth $1,584.1M ($75.79 per share), it owes $398.1M ($19.05), leaving $1,186.0M ($56.75). Margin of safety price: $26. How sure are we of the earnings level? Moderately: six years of cash flow between $78M and $113M before interest, but much of it comes from bid contracts whose estimates can turn (unfavorable contract adjustments were $24.0M in fiscal 2026). The worst plausible event is a repeat of the 2009 to 2011 construction bust while carrying about $400M of debt from two acquisitions bought near the top of a cycle; the hard assets and unsecured bank facility give room, but a covenant breach would hand leverage to the banks and could cost shareholders dilution, which is why the bear case is so low. The things we are most likely to be wrong about are how deep the next downturn is, whether Kalwall and GroGlass earn what management says, and whether installation contracts keep producing losses; if all three go the wrong way the shares would be worth roughly $5 to $15. At $26 the business produces about $4.60 a share of cash flow after interest, about 18% a year, from which Apogee has paid a dividend and bought back stock, and a move toward the base value of about $44 within three years implies a 20% annual return. Above $26 the bear case takes too much of the implied return; below it the cash yield alone comes close to the target during the holding period. What changed since our previous analysis. Apogee completed Kalwall and agreed to buy GroGlass, adding about $103M to debt and commitments, partly offset by a modest earnings contribution we now credit; the share count fell to 20.9M from 21.3M after buybacks. The bear case is lower because we now model a full construction downturn of the fiscal 2010 to 2011 kind against this higher debt, rather than only a return to the fiscal 2022 low.