Reviewing Argan (AGX) and Fluor Corporation (NYSE:FLR)

Fluor Corporation (NYSE: FLR) and Argan (NYSE:AGX) are both construction companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Fluor Corporation and Argan, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fluor Corporation 0 8 3 0 2.27
Argan 0 2 1 0 2.33

Fluor Corporation currently has a consensus price target of $49.33, suggesting a potential upside of 27.64%. Argan has a consensus price target of $71.00, suggesting a potential upside of 16.68%. Given Fluor Corporation’s higher possible upside, equities analysts plainly believe Fluor Corporation is more favorable than Argan.

Dividends

Fluor Corporation pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. Argan pays an annual dividend of $0.70 per share and has a dividend yield of 1.2%. Fluor Corporation pays out 106.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Argan pays out 13.9% of its earnings in the form of a dividend.

Profitability

This table compares Fluor Corporation and Argan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fluor Corporation 0.58% 13.80% 4.92%
Argan 10.15% 27.78% 13.15%

Risk and Volatility

Fluor Corporation has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500. Comparatively, Argan has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Earnings & Valuation

This table compares Fluor Corporation and Argan’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fluor Corporation $19.31 billion 0.28 $562.31 million $0.79 48.92
Argan $775.19 million 1.22 $126.79 million $5.05 12.05

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

Institutional & Insider Ownership

83.1% of Fluor Corporation shares are held by institutional investors. Comparatively, 83.5% of Argan shares are held by institutional investors. 1.3% of Fluor Corporation shares are held by company insiders. Comparatively, 7.6% of Argan shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Argan beats Fluor Corporation on 10 of the 16 factors compared between the two stocks.

About Fluor Corporation

Fluor Corporation (Fluor) is a holding company. The Company operates its business in four segments: Energy, Chemicals & Mining; Industrial, Infrastructure & Power; Government, and Maintenance, Modification & Asset Integrity (MMAI). The Company, through its subsidiaries, offers professional services providing engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services on a global basis. The Company is an integrated solutions provider for various industries, including oil and gas, chemicals and petrochemicals, mining and metals, transportation, power, life sciences and advanced manufacturing. It is also a service provider to the United States federal Government and governments abroad. It offers services in various categories, including engineering and design, procurement, construction, fabrication, maintenance, modification and asset integrity and project management.

About Argan

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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