Granite Construction (GVA) and Argan (AGX) Critical Analysis
Granite Construction (NYSE: GVA) and Argan (NYSE:AGX) are both construction companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.
Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 1.0%. Argan pays an annual dividend of $0.70 per share and has a dividend yield of 1.2%. Granite Construction pays out 48.6% of its earnings in the form of a dividend. Argan pays out 13.9% 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. Argan is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk & Volatility
Granite Construction has a beta of 1.2, meaning that its share price is 20% 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.
This is a breakdown of current recommendations and price targets for Granite Construction and Argan, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Granite Construction currently has a consensus price target of $62.14, suggesting a potential upside of 18.68%. Argan has a consensus price target of $71.00, suggesting a potential upside of 17.45%. Given Granite Construction’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Granite Construction is more favorable than Argan.
Earnings and Valuation
This table compares Granite Construction and Argan’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Granite Construction||$2.70 billion||0.77||$126.96 million||$1.07||48.94|
|Argan||$775.19 million||1.21||$126.79 million||$5.05||11.97|
Granite Construction has higher revenue and earnings than Argan. Argan is trading at a lower price-to-earnings ratio than Granite Construction, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
94.0% of Granite Construction shares are held by institutional investors. Comparatively, 86.1% of Argan shares are held by institutional investors. 1.3% of Granite Construction shares are held by company insiders. Comparatively, 9.5% of Argan shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This table compares Granite Construction and Argan’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
About Granite Construction
Granite Construction Incorporated is a heavy civil contractor and construction materials producer in the United States. The Company operates through three segments: Construction, Large Project Construction and Construction Materials. The Company operates across the nation, serving both public and private sector clients. Within the public sector, it concentrates on heavy-civil infrastructure projects, including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, trenchless and underground utilities, power-related facilities, water and wastewater facilities, utilities, tunnels, dams and other infrastructure-related projects. Within the private sector, the Company offers site preparation and infrastructure services for residential development, energy development, commercial and industrial sites, and other facilities, as well as provides construction management professional services.
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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