Argan (AGX) Could Be 54% Undervalued As Revenue And EPS Jump

Argan (AGX) has drawn fresh attention after its latest quarter, where revenue climbed 61.5% year on year and earnings per share rose 50.4%, supported by a US$888.6 million net cash position.

Even with those quarterly gains, Argan's recent share price performance has been weak, with the stock falling 10.1% on the day, 26.8% over the past week and 37.8% over the last month. However, the 3 year total shareholder return of a little over 5x still reflects a strong longer run outcome.

Scan beyond Argan and assess how other infrastructure builders with strong cash positions stack up by using our curated list of list of solid balance sheet and fundamentals (24 results).

For Argan, sharp price weakness is now colliding with strong recent trading results and a hefty cash cushion. Is this slump mostly about sentiment resetting, or does it signal a rethink of what the business is worth?

Most Popular Narrative: 54% Undervalued

Argan's most followed valuation storyline pegs fair value at $570.5, well above the last close of $261.21. This puts the recent share price slide in a very different light for anyone focused on long term fundamentals.

The capital light EPC model and roughly $1.0b of cash and investments with no debt, alongside ongoing dividends and buybacks, give Argan financial flexibility to pursue additional power and industrial work that can support earnings and net margin resilience.

See why 129 investors see Argan as 54% undervalued.

Result: Fair Value of $570.5 (UNDERVALUED)

Still, the Argan narrative can crack if gross margins in the Power and Industrial segments stay compressed, or if new projects fail to replenish that US$2.5b backlog.

Find out about the key risks to this Argan narrative.

Another View On Argan's Value

The story looks very different when switching from the narrative fair value of $570.5 to the SWS DCF model. On that framework, Argan's future cash flows point to a value of $225.56, which is below the current $261.21 share price and, on this measure, frames the stock as overvalued. Which yardstick do you trust more for your own work?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Argan for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 42 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Feeling mixed after all this on Argan? Act while the details are fresh and pressure test the upside case for yourself with 4 key rewards.

Looking for more investment ideas beyond Argan?

If Argan has sharpened your appetite for opportunity, do not stop here. Broaden your watchlist now so you are not scrambling after the next move.

• Hunt for quality at a discount by scanning companies that currently screen as 42 high quality undervalued stocks and see which ones deserve a deeper look.
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