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Argan Inc (AGX)
NYSE:AGX
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Argan
(NYSE:AGX)
73Outperform
Positive Factors
Earnings
Q3 results were above expectations as the large Trumbull project was at full activity levels and combined with favorable closeouts on other projects.
Future Projects
Management was increasingly bullish on the new project pipeline and expects several new large natural gas power plant projects to be awarded within the next eight months.
Negative Factors
Backlog
Despite expecting positive Q3 results and bullish commentary, there is an anticipation of a decline in backlog due to no recent major project announcements.
Argan (AGX) vs. S&P 500 (SPY)
Market Cap
$1.50B
Dividend Yield1.3%
Average Volume (3M)444.30K
Price to Earnings (P/E)21.8
Beta (1Y)0.48
Revenue Growth52.83%
EPS Growth94.89%
CountryUS
Employees1,214
SectorIndustrials
Sector Strength72
IndustryConstruction
Share Statistics
EPS (TTM)4.77
Shares Outstanding13,575,116
10 Day Avg. Volume382,558
30 Day Avg. Volume444,302
Financial Highlights & Ratios
PEG Ratio0.23
Price to Book (P/B)N/A
Price to Sales (P/S)1.75
Price to Cash Flow (P/CF)11.10
P/FCF Ratio12.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$150.00Price Target Upside35.35% Upside
Rating ConsensusHold
Number of Analyst Covering1
Argan Business Overview & Revenue Model
Company DescriptionArgan, Inc. operates as a holding company, which engages in the provision of consulting, engineering, procurement, construction, commissioning, operations, and maintenance services to the power generation and renewable energy. It operates through the following segments: Power Services, Telecom Services, Industrial Services, and Others. The company was founded in May 1961 and is headquartered in Rockville, MD.
How the Company Makes MoneyArgan, Inc. generates revenue through its subsidiaries by providing engineering, procurement, and construction services to the power generation industry. The company earns money by undertaking large-scale construction projects for natural gas-fired power plants and renewable energy facilities. Its revenue model is primarily based on long-term contracts with utility companies, independent power producers, and industrial customers. Argan benefits from its ability to manage complex projects from conception to completion, which includes securing necessary permits, designing facilities, procuring materials, and managing construction. Additionally, the company may engage in operations and maintenance services for completed projects, providing a steady flow of income post-construction. Significant partnerships with technology providers and industry leaders also enhance Argan's capabilities and competitiveness in the market.
Argan Financial Statement Overview
Summary
Argan exhibits strong financial health across its income statement, balance sheet, and cash flow statement. The company demonstrates impressive growth and profitability, underpinned by sound financial management and a low-risk capital structure.Income Statement
Argan has demonstrated a strong financial performance with a robust Gross Profit Margin of 14.4% and a Net Profit Margin of 8.2% in the TTM (Trailing-Twelve-Months). The company has shown impressive Revenue Growth of 40.6% over the past year, indicating a positive trajectory in revenue generation. The EBIT Margin of 8.3% and EBITDA Margin of 8.6% support the company's operational efficiency and profitability. Overall, Argan's income statement reflects strong profitability and growth dynamics.85
Very Positive
Balance Sheet
Argan maintains a solid financial position with a low Debt-to-Equity Ratio of 0.01, reflecting minimal leverage and strong equity backing. The Return on Equity (ROE) stands at 20.1%, showcasing effective utilization of shareholder funds. The Equity Ratio is a healthy 42.8%, indicating a strong capital structure with substantial equity compared to total assets. The balance sheet portrays stability and prudent financial management.90
Very Positive
Cash Flow
Argan's cash flow performance is commendable, with a significant Free Cash Flow Growth Rate of 24.2% year-over-year. The Operating Cash Flow to Net Income Ratio of 2.23 indicates strong cash generation relative to net earnings. Additionally, the Free Cash Flow to Net Income Ratio of 2.14 highlights effective cash utilization. The cash flow statements reflect robust liquidity and effective cash management strategies.80
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 806.26M | 573.33M | 455.04M | 509.37M | 392.21M | 239.00M | Gross Profit |
| 116.04M | 80.83M | 86.36M | 99.73M | 62.07M | -6.82M | EBIT |
| 67.25M | 36.46M | 41.67M | 44.51M | 18.41M | -55.84M | EBITDA |
| 68.98M | 38.86M | 45.38M | 56.65M | 27.64M | -46.30M | Net Income Common Stockholders |
| 66.11M | 32.36M | 33.10M | 38.24M | 23.85M | -42.94M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 296.53M | 412.40M | 325.46M | 440.50M | 456.73M | 327.86M | Total Assets |
| 476.65M | 598.23M | 489.49M | 553.59M | 602.63M | 487.54M | Total Debt |
| 0.00 | 5.32M | 1.57M | 3.66M | 2.11M | 2.21M | Net Debt |
| -164.32M | -191.71M | -172.38M | -346.82M | -364.56M | -165.15M | Total Liabilities |
| 82.28M | 307.29M | 208.59M | 227.99M | 280.22M | 146.51M | Stockholders Equity |
| 394.57M | 290.94M | 280.90M | 326.39M | 320.67M | 339.25M |
| Cash Flow | Free Cash Flow | ||||
| 141.72M | 114.10M | -33.43M | 26.99M | 172.98M | 46.51M | Operating Cash Flow |
| 147.56M | 116.86M | -30.06M | 28.41M | 174.68M | 53.56M | Investing Cash Flow |
| -132.57M | -67.61M | -63.12M | -7.04M | 68.30M | -36.06M | Financing Cash Flow |
| -25.62M | -26.05M | -82.80M | -34.61M | -45.41M | -13.99M |
Argan Technical Analysis
Negative
110.82
Price Trends
144.45
Negative
143.46
Negative
111.74
Negative
Market Momentum
-9.84
Positive
35.54
Neutral
20.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AGX, the sentiment is Negative. The current price of 110.82 is below the 20-day moving average (MA) of 130.77, below the 50-day MA of 144.45, and below the 200-day MA of 111.74, indicating a bearish trend. The MACD of -9.84 indicates Positive momentum. The RSI at 35.54 is Neutral, neither overbought nor oversold. The STOCH value of 20.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AGX.
Argan Risk Analysis
Argan disclosed 39 risk factors in its most recent earnings report. Argan reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Argan Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $16.94B | 16.79 | 37.25% | 0.28% | 15.76% | 61.64% | |
73 Outperform | $1.50B | 21.79 | 21.55% | 1.30% | 52.83% | 94.89% | |
73 Outperform | $6.78B | 18.57 | 26.45% | 1.16% | 11.30% | ― | |
72 Outperform | $6.01B | 2.92 | 72.85% | ― | 5.43% | 2094.12% | |
72 Outperform | $36.46B | 39.26 | 13.32% | 0.16% | 13.36% | 20.00% | |
62 Neutral | $8.16B | 12.85 | 0.64% | 3.04% | 3.83% | -15.83% | |
61 Neutral | $3.96B | 17.27 | 20.35% | ― | 12.61% | 7.43% |
* Industrials Sector Average
Performance Comparison
AGX
Argan
110.82
62.29
128.35%
DY
Dycom
144.12
1.95
1.37%
EME
EMCOR Group
372.60
49.52
15.33%
FLR
Fluor
35.60
-2.85
-7.41%
KBR
KBR
50.73
-9.96
-16.41%
PWR
Quanta Services
246.03
4.52
1.87%
Argan Earnings Call Summary
Earnings Call Date: Dec 5, 2024 | % Change Since: -25.38% | Next Earnings Date: Apr 9, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with significant revenue growth and profitability, particularly in the Power Services segment. The company's focus on renewable projects and a strong balance sheet were positive aspects. However, there were some concerns about a sequential decrease in project backlog and expected short-term revenue reduction in the Industrial Construction Services segment.Highlights
Second Highest Quarterly Results in Company History
The third quarter results were the second highest in company history with consolidated revenue growth of 57% to $257 million. Gross margin was 17.2%, with a net income of $28 million, or $2 per diluted share, and EBITDA of $37.5 million.
Power Services Segment Strong Performance
The Power Services segment had a revenue growth of 75% to $212 million, representing 83% of third quarter revenues. The segment reported a pretax book income of $36 million.
Increased Project Backlog and Renewable Focus
Project backlog increased by 6% to $0.8 billion, with $478 million of renewable projects. 92% of the current project backlog supports 0 or low carbon emissions.
Strong Balance Sheet
The company reported $506 million in cash and investments, net liquidity of $281 million, and no debt as of October 31, 2024.
Increased Quarterly Dividend
The Board of Directors approved a 25% increase in the quarterly dividend to $0.375 per common share, reflecting confidence in the business.
Lowlights
Sequential Backlog Decline
Backlog decreased sequentially from $1 billion recorded at July 31, 2024, due to the conversion of backlog into revenue and timing of new project contracts.
Industrial Construction Services Backlog Reduction
The Industrial Construction Services backlog dropped to $66 million, with expectations for revenues to come down in the next quarters before rebounding.
Company Guidance
During the earnings call for Argan, Inc.'s third fiscal quarter ending October 31, 2024, the company reported significant financial metrics, highlighting a 57% increase in consolidated revenues to $257 million, with a gross margin of 17.2% and net income of $28 million, or $2 per diluted share. The Power Services segment achieved a 75% revenue growth to $212 million, while the Industrial Construction Services saw an 8% increase to $41.3 million. Argan's project backlog was reported at $0.8 billion, up 6% from the beginning of the year, with a substantial portion, $478 million, comprising renewable projects. The company also reported a net liquidity of $281 million and no debt, alongside a 25% increase in the quarterly dividend to $0.375 per share. Argan remains optimistic about its growth prospects, driven by a strong demand for natural gas and renewable energy projects amidst rising energy demands.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.