Comparing Argan (NYSE:AGX) & United Rentals (NYSE:URI)

Argan (NYSE:AGX) and United Rentals (NYSE:URI) are both construction companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Analyst Ratings

This is a summary of current ratings for Argan and United Rentals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Argan	0	3	5	0	2.63
United Rentals	1	5	12	2	2.75

Argan presently has a consensus price target of $301.00, indicating a potential downside of 23.94%. United Rentals has a consensus price target of $975.61, indicating a potential upside of 19.64%. Given United Rentals’ stronger consensus rating and higher probable upside, analysts plainly believe United Rentals is more favorable than Argan.

Dividends

Argan pays an annual dividend of $2.00 per share and has a dividend yield of 0.5%. United Rentals pays an annual dividend of $7.16 per share and has a dividend yield of 0.9%. Argan pays out 24.0% of its earnings in the form of a dividend. United Rentals pays out 18.4% 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 has raised its dividend for 2 consecutive years and United Rentals has raised its dividend for 3 consecutive years. United Rentals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Argan has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500. Comparatively, United Rentals has a beta of 1.73, suggesting that its share price is 73% more volatile than the S&P 500.

Insider and Institutional Ownership

79.4% of Argan shares are owned by institutional investors. Comparatively, 96.3% of United Rentals shares are owned by institutional investors. 6.7% of Argan shares are owned by company insiders. Comparatively, 0.5% of United Rentals shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Argan and United Rentals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Argan	12.73%	32.61%	14.29%
United Rentals	15.83%	31.30%	9.61%

Valuation & Earnings

This table compares Argan and United Rentals”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Argan	$920.89 million	5.94	$85.46 million	$8.32	47.57
United Rentals	$15.99 billion	3.25	$2.58 billion	$38.88	20.97

United Rentals has higher revenue and earnings than Argan. United Rentals is trading at a lower price-to-earnings ratio than Argan, indicating that it is currently the more affordable of the two stocks.

Summary

United Rentals beats Argan on 13 of the 18 factors compared between the two stocks.

About Argan

Argan, Inc., through its subsidiaries, provides engineering, procurement, construction, commissioning, maintenance, project development, and technical consulting services to the power generation market. The company operates through Power Services, Industrial Services, and Telecom Services segments. The Power Services segment offers engineering, procurement, and construction, as well as designing, building, and commissioning of large-scale energy projects to the owners of alternative energy facilities, such as biomass plants, wind farms, and solar fields; and design, construction, project management, start-up, and operation services for projects with approximately 18 gigawatts of power-generating capacity. This segment serves independent power project owners, public utilities, power plant equipment suppliers, and other commercial firms. The Industrial Services segment provides industrial construction and field services and vessel fabrication services for fertilizer, engineering and construction, forest products, and various other industrial companies in southeast region of the United States. The Telecom Services segment offers trenchless directional boring and excavation for underground communication and power networks, as well as aerial cabling services; and installs buried cable, high and low voltage electric lines, and private area outdoor lighting systems. It also provides structured cabling, terminations, and connectivity that offers the physical transport for high-speed data, voice, video, and security networks. This segment serves electricity cooperative, state and local government agencies, counties and municipalities, and technology-oriented government contracting firms, as well as federal government facilities in the mid-Atlantic region of the United States. Argan, Inc. was incorporated in 1961 and is headquartered in Rockville, Maryland.

About United Rentals

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals and Specialty. The General Rentals segment rents general construction and industrial equipment includes backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools for construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities. The specialty segment rents specialty construction products, including trench safety equipment consists of trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers, and line testing equipment for underground work; power and heating, ventilating, and air conditioning equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment; fluid solutions equipment for fluid containment, transfer, and treatment; and mobile storage equipment and modular office space. This segment serves construction companies involved in infrastructure projects, and municipalities and industrial companies. It also sells aerial lifts, reach forklifts, telehandlers, compressors, and generators; construction consumables, tools, small equipment, and safety supplies; and parts for equipment that is owned by its customers, as well as provides repair and maintenance services. The company sells used equipment through its sales force, brokers, website, at auctions, and directly to manufacturers. The company operates in the United States, Canada, Europe, Australia, and New Zealand. United Rentals, Inc. was incorporated in 1997 and is headquartered in Stamford, Connecticut.