Why Argan Stock Plummeted by 12% Today
Key Points
The industrial construction specialist unveiled its third-quarter results.
It missed on revenue, but beat convincingly on net income.
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Industrial construction specialist Argan (NYSE: AGX) didn't finish the trading week on a high note. On Friday, investors assertively sold out of the stock following the release of an earnings report that many found dispiriting. The company's share price fell by 12% that trading session.
A beat and a miss
In Argan's third quarter, the company reported revenue of nearly $251.2 million, a 2% decrease year-over-year. Net income according to generally accepted accounting principles (GAAP) went the other way, rising by nearly 10% to $30.7 million, or $2.17 per share.
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That resulted in a mixed quarter for Argan, as it missed the consensus analyst estimate of $254.5 million for revenue but beat the average projection of $1.77 per share for GAAP net profit.
In its earnings release, Argan stated that the dip in revenue was due to unfavorable timing and project mix. As for the bottom-line increase, management attributed this to higher gross margins for its power industry and industrial construction segments.
Punished by Mr. Market
It's clear investors weren't in a forgiving mood, as the quarter wasn't a bad one for Argan. Yet they might have expected better, given the Trump administration's efforts to bolster the build-out of manufacturing facilities and infrastructure in this country. I think Friday's sell-off might provide a good opportunity to get this reliably profitable company at a discount.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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