Critical Comparison: NCI Building Systems (NYSE:NCS) and Argan (AGX)

NCI Building Systems (NYSE: NCS) and Argan (NYSE:AGX) are both small-cap industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Profitability

This table compares NCI Building Systems and Argan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NCI Building Systems 3.08% 18.76% 5.56%
Argan 9.18% 26.24% 12.66%

Valuation & Earnings

This table compares NCI Building Systems and Argan’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NCI Building Systems $1.77 billion 0.71 $54.72 million $0.77 24.42
Argan $675.05 million 1.04 $70.32 million $5.39 8.36

Argan has lower revenue, but higher earnings than NCI Building Systems. Argan is trading at a lower price-to-earnings ratio than NCI Building Systems, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

96.2% of NCI Building Systems shares are owned by institutional investors. Comparatively, 87.6% of Argan shares are owned by institutional investors. 1.8% of NCI Building Systems shares are owned by company insiders. Comparatively, 7.6% of Argan shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Argan pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. NCI Building Systems does not pay a dividend. Argan pays out 18.6% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for NCI Building Systems and Argan, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NCI Building Systems 0 1 2 0 2.67
Argan 0 2 0 0 2.00

NCI Building Systems currently has a consensus price target of $21.00, suggesting a potential upside of 11.70%. Argan has a consensus price target of $56.00, suggesting a potential upside of 24.31%. Given Argan’s higher possible upside, analysts plainly believe Argan is more favorable than NCI Building Systems.

Risk and Volatility

NCI Building Systems has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500. Comparatively, Argan has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.

Summary

Argan beats NCI Building Systems on 9 of the 16 factors compared between the two stocks.

NCI Building Systems Company Profile

NCI Building Systems, Inc. is a manufacturer and marketer of metal products in North America. The Company’s operating segments include Engineered building systems, Metal components and Metal coil coating. The Engineered building systems segment is engaged in the manufacturing of main frames and long bay systems, and engineering and drafting. The Metal components segment’s products include metal roof and wall panels, doors, metal partitions, metal trim, insulated metal panel (IMP) products and other related accessories. The Company manufactures and distributes a range of metal products for the non-residential construction market. It operates in the United States, Mexico, Canada and China. The Company provides metal coil coating services, and designs, engineers, manufactures and markets metal components and engineered building systems. It also provides metal coil coating services for commercial and construction applications, servicing both internal and external customers.

Argan Company Profile

Argan, Inc. is a holding company. The Company conducts operations through its subsidiaries, Gemma Power Systems, LLC and affiliates (GPS), Atlantic Projects Company Limited (APC), Southern Maryland Cable, Inc. (SMC) and The Roberts Company (Roberts). Through GPS and APC, the Company’s power industry services segment provides engineering, procurement, construction, commissioning, operations management, maintenance, development, technical and consulting services to the power generation and renewable energy markets. Through SMC, the telecommunications infrastructure services segment of the Company provides project management, construction, installation and maintenance services to commercial, local government and federal government customers. Through Roberts, the Company’s industrial fabrication and field services segment produces, delivers and installs fabricated steel components specializing in pressure vessels and heat exchangers for industrial plants.

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