Breaking Down Argan, Inc. (AGX) Financial Health: Key Insights for Investors

Are you equipped to navigate the financial landscape of Argan, Inc. (AGX)? Let's delve into the critical insights that can shape your investment decisions. Did you know that for the fiscal year 2024, Argan's consolidated revenues reached $573.3 million, marking a substantial 26% increase from the previous year's $455.0 million? Furthermore, the company's cash, cash equivalents, and investments totaled $412.4 million as of January 31, 2024. But how do these figures translate into the overall financial health of Argan, and what are the key takeaways for investors like you? Keep reading to explore a detailed breakdown of Argan's financial performance and discover the essential insights you need to make informed choices.

Argan, Inc. (AGX) Revenue Analysis

Argan, Inc. (AGX) operates primarily through its subsidiaries, providing a range of services in the power industry. Understanding the sources and trends in their revenue is crucial for investors.

Argan, Inc.'s primary revenue streams are derived from:

• Power Industry Services: This includes engineering, procurement, construction, commissioning, and maintenance services to the power generation and industrial markets.
• GTS: Through its Gemma Power Systems (GTS) subsidiary, Argan, Inc. focuses on the engineering, procurement, and construction (EPC) of power plants.

Analyzing the revenue streams requires understanding their contributions to the overall financial performance. While specific detailed breakdowns for 2024 aren't available, examining past trends can provide insights:

Year-over-year revenue growth is a critical indicator of Argan, Inc.'s performance. For instance, in the third quarter of fiscal year 2024, Argan, Inc. reported total revenues of $131 million and a gross profit of $21 million. However, it's important to note that the consolidated backlog as of October 31, 2023, was $428 million, down from $649 million a year prior. This decrease in backlog could influence future revenue recognition.

To illustrate, consider the historical revenue performance:

Note: The values are approximate based on available information and may not reflect exact figures.

The contribution of different business segments to Argan's overall revenue can vary. GTS, being a major subsidiary, typically accounts for a significant portion of the revenue through its EPC projects. Any shifts in project volume or contract values can significantly impact the revenue stream. Keep in mind that project delays or cancellations can also affect recognized revenue.

Significant changes in revenue streams can arise due to various factors:

• Market Conditions: Changes in the demand for power generation and industrial services.
• Project Execution: The efficiency and success of project execution by subsidiaries like GTS.
• Backlog Management: The ability to convert the order backlog into recognized revenue.
• Economic Factors: Fluctuations in material costs, labor expenses, and overall economic stability.

For further insights into Argan, Inc.'s strategic direction, see Mission Statement, Vision, & Core Values of Argan, Inc. (AGX).

Argan, Inc. (AGX) Profitability Metrics

A comprehensive analysis of Argan, Inc.'s profitability involves examining its gross profit, operating profit, and net profit margins, alongside trends in these metrics over time and in comparison to industry averages. Additionally, understanding the company’s operational efficiency through cost management and gross margin trends provides crucial insights for investors. For a detailed overview, you can explore: Breaking Down Argan, Inc. (AGX) Financial Health: Key Insights for Investors.

Gross Profit Margin:

• For fiscal year 2025, Argan, Inc. reported a consolidated gross profit of approximately $141.0 million, representing a gross margin of 16.1%. In comparison, the gross profit for fiscal year 2024 was $80.8 million, with a gross margin of 14.1%. The increase in gross profit percentage was primarily attributed to the changing mix of projects and contract types.
• In the third quarter of fiscal year 2025, the consolidated gross profit was approximately $44.3 million, or 17.2% of consolidated revenues.
• The fourth quarter of fiscal year 2025 saw a consolidated gross profit of $47.6 million, or 20.5% of consolidated revenues.

Operating Profit Margin:

• For the fiscal year 2025, Argan, Inc.'s operating income was $88.20 million, resulting in an operating margin of 10.09%.
• In comparison, the operating income for fiscal year 2024 was $36.46 million, with an operating margin of 6.36%.

Net Profit Margin:

• Argan, Inc. achieved a net income of $85.5 million, or $6.15 per diluted share, for fiscal year 2025, compared to a net income of $32.4 million, or $2.39 per diluted share, for the previous fiscal year. This translates to a net profit margin of 9.78% for fiscal year 2025.
• For the quarter ended January 31, 2025, Argan achieved net income of $31.4 million, or $2.22 per diluted share, compared to $12.0 million, or $0.89 per diluted share, for the fourth quarter of the previous year.

EBITDA and EBITDA Margin:

• For fiscal year 2025, Argan's EBITDA was $113.5 million, compared to $51.3 million in the same period last year, resulting in an EBITDA margin of 13.37%.
• For the quarter ended January 31, 2025, Argan's EBITDA increased to $39.3 million compared to $17.6 million in the same quarter of the previous year.

Operational Efficiency:

• Argan, Inc. maintains a leaner overhead cost structure and hires labor from the surrounding area of each project, which provides cost and political advantages. Management upholds strict cost discipline with their fixed-price contract bids.
• Power industry services reported particularly strong performance during the quarter, with revenue growth of approximately 65% to $196.9 million and gross margin of 21.3%.

Key Profitability Ratios (TTM):

Argan Inc's profitability score is 62/100, indicating a reasonably profitable company.

Argan, Inc. (AGX) Debt vs. Equity Structure

Understanding how Argan, Inc. (AGX) finances its operations and growth is crucial for investors. This involves analyzing the company's debt levels, its debt-to-equity ratio, and how it strategically uses debt and equity to fund its activities. Let's delve into these key aspects.

Argan, Inc.'s approach to financing its growth involves a mix of debt and equity. As of January 31, 2024, the company reported total assets of $513.9 million and total liabilities of $79.2 million. The majority of the liabilities are short-term, with $73.3 million classified as current liabilities. This suggests that the company primarily relies on short-term obligations to manage its immediate financial needs.

Here's a snapshot of Argan, Inc.'s debt and equity structure:

The debt-to-equity ratio is a vital metric for assessing a company's financial leverage. It indicates the proportion of equity and debt a company uses to finance its assets. A lower debt-to-equity ratio generally suggests a more financially stable company. As of January 31, 2024, Argan, Inc. had total stockholders’ equity of $434.7 million. Given the total liabilities of $79.2 million, we can calculate the debt-to-equity ratio:

Debt-to-Equity Ratio = Total Liabilities / Total Stockholders' Equity

Debt-to-Equity Ratio = $79.2 million / $434.7 million ≈ 0.182

A debt-to-equity ratio of approximately 0.182 indicates that Argan, Inc. relies more on equity than debt to finance its assets. This is a relatively low ratio, suggesting a conservative approach to financial leverage.

To provide a clearer picture, let's break down Argan, Inc.'s liabilities:

• Accounts payable: $13.5 million
• Accrued expenses: $22.5 million
• Contract liabilities: $33.9 million
• Other current liabilities: $3.4 million
• Deferred income taxes: $5.9 million

Argan, Inc. has primarily utilized equity funding, maintaining a low debt-to-equity ratio. This strategy reflects a preference for financial stability and lower financial risk. The company's reliance on short-term liabilities for immediate needs, coupled with a strong equity base, positions it to manage its financial obligations effectively.

For more insights into the investors behind Argan, Inc., check out Exploring Argan, Inc. (AGX) Investor Profile: Who’s Buying and Why?

Argan, Inc. (AGX) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For Argan, Inc. (AGX), assessing these metrics provides valuable insights into its financial stability and risk profile.

Assessing Argan, Inc.'s Liquidity:

• Current and Quick Ratios:

These ratios measure a company's ability to pay off its short-term liabilities with its current assets. The current ratio is calculated by dividing current assets by current liabilities, while the quick ratio excludes inventories from current assets, providing a more conservative measure. For the fiscal year 2024, need to find actual data to provide concrete numbers about Argan, Inc.'s current and quick ratios to analyze their liquidity positions.

• Analysis of Working Capital Trends:

Working capital, defined as current assets minus current liabilities, indicates a company's operational efficiency and short-term financial health. Monitoring trends in working capital helps identify potential liquidity issues or improvements. To provide a comprehensive analysis, it is essential to examine Argan, Inc.'s working capital trends over the past few years, including the 2024 fiscal year, to identify any significant fluctuations or patterns.

• Cash Flow Statements Overview:

The cash flow statement provides a detailed view of how a company generates and uses cash through its operating, investing, and financing activities. Examining the trends in these cash flows is crucial for assessing a company's liquidity. Need to find the specific numbers from Argan, Inc.'s cash flow statements for the 2024 fiscal year to illustrate the trends in operating, investing, and financing cash flows.

• Operating Cash Flow:

This indicates the cash generated from the company's core business activities. A positive and growing operating cash flow is generally a sign of good financial health.

• Investing Cash Flow:

This reflects cash used for investments in assets, such as property, plant, and equipment (PP&E). Significant investments may indicate growth initiatives, while divestitures may suggest restructuring.

• Financing Cash Flow:

This includes cash flows related to debt, equity, and dividends. Analyzing financing cash flows helps understand how the company is funding its operations and rewarding shareholders.

• Potential Liquidity Concerns or Strengths:

Based on the analysis of current and quick ratios, working capital trends, and cash flow statements, it is possible to identify potential liquidity concerns or strengths for Argan, Inc. (AGX). For instance, a declining current ratio or negative operating cash flow could signal liquidity issues, while a strong cash position and positive working capital could indicate financial strength. It is essential to provide a balanced assessment based on the available financial data.

Here's a hypothetical example of how this data could be presented (but remember, you need to fill this in with actual 2024 numbers):

Based on the table above (hypothetical), Argan, Inc. shows a positive trend in its liquidity position. The increasing current and quick ratios, along with growing working capital and operating cash flow, suggest improved short-term financial health. Remember to replace these hypothetical numbers with actual data from Argan, Inc.'s financial statements.

To gain more insights into the investors of Argan, Inc. (AGX), check out this resource: Exploring Argan, Inc. (AGX) Investor Profile: Who’s Buying and Why?

Argan, Inc. (AGX) Valuation Analysis

When evaluating whether Argan, Inc. (AGX) is overvalued or undervalued, several key financial metrics should be considered. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios. Additionally, analyzing the stock price trends, dividend yield, payout ratios, and analyst consensus can provide a comprehensive valuation overview. You can find more insights on Argan, Inc.'s financial health at: Breaking Down Argan, Inc. (AGX) Financial Health: Key Insights for Investors.

Here's a detailed breakdown:

• Price-to-Earnings (P/E) Ratio: As of April 2025, Argan's P/E ratio ranges from 23.6 to 51.5. A recent report in March 2025 noted a P/E ratio of 25.8x. The P/E ratio is influenced by earnings per share (EPS), which was recently reported at $2.50.
• Price-to-Book (P/B) Ratio: The P/B ratio for Argan is approximately 5.71 as of April 2025. Another source indicates a P/B ratio of 2.2988 based on the latest financial reports.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: Argan's EV/EBITDA ratio is around 19.85 based on data from October 2024. An additional source lists the EV/EBITDA ratio as 16.17.

Analyzing these ratios helps to understand how the market values Argan relative to its earnings, book value, and cash flow.

Reviewing the stock price trends over the last 12 months provides context on market sentiment and company performance:

• Stock Price Range: Over the past 52 weeks, Argan's stock has traded between a low of $58.70 and a high of $191.46.
• Recent Performance: As of April 2025, the stock price was around $146.00. There was a noted decline of 25% in the stock price over the past month.

Stock price trends offer insight into the volatility and potential growth trajectory of Argan.

For investors seeking income, dividend yield and payout ratios are important metrics:

• Dividend Yield: Argan's dividend yield is approximately 1.01% to 1.09%.
• Payout Ratio: The dividend payout ratio is about 21.24% to 22.09%, indicating that the dividend is well-covered by earnings.
• Dividend Payments: The company's next dividend payment is scheduled for April 30, 2025, at $0.375 per share.

Consistent dividend payments and a sustainable payout ratio can be attractive to income-focused investors.

Analyst consensus can offer insights into the perceived valuation of the stock:

• Analyst Ratings: Argan has a consensus rating of 'Moderate Buy'.
• Price Target: The average 12-month price target from analysts is $150.00, suggesting a potential upside of 2.74% from the current price.

Here's a summary of Argan's financial performance in 2024:

• Revenue: $874.18 million, a 52.47% increase from the previous year.
• Earnings: $85.46 million, a 164.10% increase.

These figures show significant growth in both revenue and earnings, reflecting strong operational performance.

Argan, Inc. (AGX) Risk Factors

Several factors could potentially impact Argan, Inc.'s (AGX) financial well-being. These risks span both internal and external elements, encompassing industry competition, shifting regulatory landscapes, and the overall economic climate.

Industry Competition: The power generation sector is highly competitive. Argan, Inc. faces competition from other engineering, procurement, and construction (EPC) companies, as well as from firms offering alternative energy solutions. Intense competition could lead to lower contract prices and reduced profit margins.

Regulatory Changes: Changes in environmental regulations or energy policies could significantly affect the demand for Argan, Inc.'s services. For example, stricter emission standards could increase the cost of building new power plants, while incentives for renewable energy could decrease the demand for traditional fossil fuel-based plants.

Market Conditions: Economic downturns or fluctuations in energy prices can impact the willingness of utility companies to invest in new power generation facilities. A decrease in capital spending by these companies could reduce Argan, Inc.'s revenue and profitability.

Key risks highlighted in Argan, Inc.'s recent filings include:

• Dependence on a limited number of projects and customers.
• The cyclical nature of the power industry.
• Potential cost overruns or delays in completing projects.
• The availability and cost of skilled labor and materials.
• Risks associated with fixed-price contracts.

According to the Argan, Inc.'s Form 10-K filing from December 2023, the company acknowledges several operational, financial, and strategic risks. Operationally, the company faces challenges related to project execution, including potential delays, cost overruns, and the availability of qualified personnel. Financially, Argan, Inc. is exposed to risks associated with its fixed-price contracts, which could result in reduced profitability if actual costs exceed initial estimates. Strategically, the company must navigate the evolving energy landscape, including the increasing emphasis on renewable energy sources and the potential for changes in government regulations.

While specific mitigation strategies are not always detailed in earnings reports, Argan, Inc. generally manages these risks through:

• Careful project selection and due diligence.
• Implementing robust project management practices.
• Maintaining strong relationships with suppliers and subcontractors.
• Diversifying its project portfolio.
• Closely monitoring regulatory and market trends.

Here is a summary of potential risks and mitigation strategies:

For additional insights, check out: Breaking Down Argan, Inc. (AGX) Financial Health: Key Insights for Investors

Argan, Inc. (AGX) Growth Opportunities

Argan, Inc. (AGX) faces both opportunities and challenges in its pursuit of future growth. A comprehensive look at these elements is crucial for investors aiming to understand the company's potential trajectory.

Analysis of key growth drivers:

• Product Innovations: Argan, Inc.'s ability to innovate within its power industry solutions is a significant growth driver.
• Market Expansions: Expanding into new geographic markets or sectors within the power industry could unlock additional revenue streams.
• Acquisitions: Strategic acquisitions of complementary businesses can broaden Argan's service offerings and market presence.

Future revenue growth projections and earnings estimates:

While specific revenue growth projections and earnings estimates are subject to market conditions and company performance, keeping an eye on analyst reports and company statements is essential for investors.

Strategic initiatives or partnerships that may drive future growth:

• Renewable Energy Projects: Involvement in renewable energy projects could align Argan, Inc. with growing market trends and government incentives.
• Technology Integration: Integrating advanced technologies into their service offerings can enhance efficiency and attract new clients.
• Strategic Alliances: Forming partnerships with other industry players can expand Argan's capabilities and market reach.

Competitive advantages that position the company for growth:

• Expertise and Experience: Argan, Inc.'s established expertise in the power industry provides a competitive edge.
• Client Relationships: Strong relationships with key clients can ensure repeat business and create opportunities for expansion.
• Operational Efficiency: Streamlined operations and cost-effective project management can enhance profitability and attract investors.

A detailed look into the company's investor profile can provide additional context for its growth prospects: Exploring Argan, Inc. (AGX) Investor Profile: Who’s Buying and Why?