Financial Analysis: Grana y Montero SAA (GRAM) and Aegion (AEGN)

Grana y Montero SAA (NYSE: GRAM) and Aegion (NASDAQ:AEGN) are both small-cap construction companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.

Insider & Institutional Ownership

13.7% of Grana y Montero SAA shares are owned by institutional investors. Comparatively, 92.9% of Aegion shares are owned by institutional investors. 3.6% of Aegion shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Grana y Montero SAA and Aegion, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Grana y Montero SAA 1 0 0 0 1.00
Aegion 0 4 1 0 2.20

Aegion has a consensus price target of $26.33, indicating a potential upside of 2.86%. Given Aegion’s stronger consensus rating and higher possible upside, analysts plainly believe Aegion is more favorable than Grana y Montero SAA.

Valuation and Earnings

This table compares Grana y Montero SAA and Aegion’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Grana y Montero SAA $1.77 billion 0.21 $2.54 million $0.24 11.46
Aegion $1.22 billion 0.68 $29.48 million ($1.21) -21.16

Aegion has lower revenue, but higher earnings than Grana y Montero SAA. Aegion is trading at a lower price-to-earnings ratio than Grana y Montero SAA, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Grana y Montero SAA has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, Aegion has a beta of 1.77, suggesting that its share price is 77% more volatile than the S&P 500.

Profitability

This table compares Grana y Montero SAA and Aegion’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Grana y Montero SAA 1.73% 3.37% 1.14%
Aegion -3.03% 7.62% 3.68%

Summary

Aegion beats Grana y Montero SAA on 10 of the 14 factors compared between the two stocks.

Grana y Montero SAA Company Profile

Grana y Montero SAA is a Peru-based holding company primarily engaged in the four business areas: Construction and Engineering Industry, Real Estate, Oil Services, and Operation of Public Concessions and Business Support Services. Through its subsidiaries, the Company provides such services as the development and management of real estate properties and leisure facilities; the exploration, production and sale of oil, natural gas and its derivates; the storage and distribution of combustibles; information technology services; engineering consultancy; the operation and maintenance of rails and roads concessions; as well as the execution and management of projects related to the generation of electric power; among others. The Company owns such subsidiaries as GMD SA, Adexus SA, Concar SA, Survial SA, Norvial SA and Promotores Asociados de Inmobiliarios SA, among others.

Aegion Company Profile

Aegion Corporation (Aegion) is engaged in providing infrastructure protection and maintenance. The Company operates through three segments: Infrastructure Solutions, Corrosion Protection and Energy Services. The Company offers service solutions, including rehabilitation of water and wastewater pipelines with Insituform cured-in-place pipe (CIPP) products; fusible polyvinyl chloride products for rehabilitation; fiber reinforced polymer systems for rehabilitation and strengthening; cathodic protection for corrosion engineering control and infrastructure rehabilitation; pipe coatings for corrosion control and prevention; high density polyethylene (HDPE) pipe lining for corrosion control, abrasion protection and pipeline rehabilitation, and construction and maintenance of oil and gas facilities. The Company’s Insituform CIPP Process for the rehabilitation of sewers, pipelines and other conduits utilizes a custom-manufactured tube, or liner, made of synthetic fiber.

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