Argan (AGX) vs. KBR (KBR) Financial Comparison

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

Profitability

This table compares Argan and KBR’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Argan	10.15%	27.78%	13.15%
KBR	-0.81%	8.74%	1.89%

Earnings & Valuation

This table compares Argan and KBR’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Argan	$775.19 million	1.21	$126.79 million	$5.05	11.92
KBR	$4.46 billion	0.47	$9.00 million	($0.25)	-59.68

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

Dividends

Argan pays an annual dividend of $0.70 per share and has a dividend yield of 1.2%. KBR pays an annual dividend of $0.32 per share and has a dividend yield of 2.1%. Argan pays out 13.9% of its earnings in the form of a dividend. KBR pays out -128.0% 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. KBR is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Argan has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500. Comparatively, KBR has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Institutional & Insider Ownership

83.5% of Argan shares are owned by institutional investors. Comparatively, 99.7% of KBR shares are owned by institutional investors. 9.5% of Argan shares are owned by company insiders. Comparatively, 0.6% of KBR shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Argan and KBR, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Argan	0	2	1	0	2.33
KBR	1	2	6	0	2.56

Argan currently has a consensus price target of $71.00, suggesting a potential upside of 17.94%. KBR has a consensus price target of $18.50, suggesting a potential upside of 23.99%. Given KBR’s stronger consensus rating and higher probable upside, analysts clearly believe KBR is more favorable than Argan.

Summary

KBR beats Argan on 9 of the 16 factors compared between the two stocks.

About Argan

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.

About KBR

KBR, Inc. is a provider of professional services and technologies across the asset and program life-cycle within the government services and hydrocarbons industries. The Company operates through business segments, including Technology & Consulting (T&C), Engineering & Construction (E&C), Government Services (GS), Non-strategic Business and Other. The T&C business segment combines KBR technologies, knowledge-based services and its three specialty consulting brands, Granherne, Energo and GVA, under a single customer-facing global business. The E&C business segment provides project and program delivery solution across the globe. The GS business segment provides life-cycle support solutions to defense, space, aviation and other programs and missions for government agencies in the United States, the United Kingdom and Australia. Its solutions include engineering services, mission and logistics support solutions, consulting, procurement, construction management and other support services.