On Friday, Argan’s stock, which makes up 27.36% of the market, performed remarkably well, soaring by 34.4% during the early hours of trading and reaching a 52-week peak. By 11:15 a.m. ET, the relatively obscure small-cap company, valued at approximately $1.2 billion, maintained a gain of 26%.
Argan specializes in constructing energy facilities, including natural-gas power and renewable energy plants. The company’s stock attracted significant investor attention thanks to its impressive second-quarter revenue and earnings growth. Here’s a closer look.
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Argan’s Stellar Earnings Report
Key highlights from Argan’s Q2 earnings report (year-over-year changes):
– Revenue: Increased by 61% to $227 million.
– Gross Margin: 13.7%, compared to 16.8% in the same period last year.
– Net Income: Rose by 43% to $18 million.
Management attributed the robust revenue growth to persistent demand for renewable energy, which bolstered sales for its power construction division, Gemma Power Systems. Additionally, successful project completions enhanced revenue for its industrial construction arm, The Roberts Company.
The Allure of Argan Stock
A closer examination of Argan’s earnings report underscores the pivotal role renewable energy may play in its future growth. To quantify this potential, Argan concluded Q2 with a $1 billion backlog, including $70 million earmarked for renewable projects. Management anticipates that data centers, electric vehicles, and the localization of manufacturing operations will be significant drivers of power demand in the years ahead, presenting new business opportunities for Argan.
By the end of the second quarter, Argan’s cash reserves had grown to approximately $485 million, up from $412 million as of January 31, 2024. With the company also distributing dividends, Argan’s stock could remain appealing to investors.
Should You Invest $1,000 in Argan Now?
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