Analyzing Argan (NYSE:AGX) & Emcor Group (EME)

Argan (NYSE: AGX) and Emcor Group (NYSE:EME) are both industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, risk, earnings and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings for Argan and Emcor Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Argan 0 2 0 0 2.00
Emcor Group 0 3 1 0 2.25

Argan presently has a consensus price target of $56.00, indicating a potential upside of 20.82%. Emcor Group has a consensus price target of $80.50, indicating a potential downside of 3.37%. Given Argan’s higher probable upside, equities analysts plainly believe Argan is more favorable than Emcor Group.

Dividends

Argan pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Emcor Group pays an annual dividend of $0.32 per share and has a dividend yield of 0.4%. Argan pays out 18.6% of its earnings in the form of a dividend. Emcor Group pays out 8.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Emcor Group has increased its dividend for 6 consecutive years.

Institutional & Insider Ownership

87.6% of Argan shares are owned by institutional investors. Comparatively, 94.1% of Emcor Group shares are owned by institutional investors. 7.6% of Argan shares are owned by insiders. Comparatively, 2.0% of Emcor Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Argan and Emcor Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Argan 9.18% 26.24% 12.66%
Emcor Group 2.82% 13.94% 5.63%

Volatility & Risk

Argan has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Emcor Group has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Valuation and Earnings

This table compares Argan and Emcor Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Argan $675.05 million 1.07 $70.32 million $5.39 8.60
Emcor Group $7.55 billion 0.65 $181.93 million $3.62 23.01

Emcor Group has higher revenue and earnings than Argan. Argan is trading at a lower price-to-earnings ratio than Emcor Group, indicating that it is currently the more affordable of the two stocks.

Summary

Emcor Group beats Argan on 9 of the 17 factors compared between the two stocks.

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.

Emcor Group Company Profile

EMCOR Group, Inc. is an electrical and mechanical construction, and facilities services firm in the United States. The Company provides building services and industrial services. Its segments are United States electrical construction and facilities services; United States mechanical construction and facilities services; United States building services; United States industrial services, and United Kingdom building services. As of December 31, 2016, its services were provided to a range of commercial, industrial, utility and institutional customers through approximately 75 operating subsidiaries and joint venture entities. It is providing construction services relating to electrical and mechanical systems in various types of non-residential and certain residential facilities, and in providing services relating to the operation, maintenance and management of facilities, including refineries and petrochemical plants. It operates various electrical and mechanical systems.

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