3 hard-hit engineering and construction stocks to buy right now
Amid rising raw material costs, supply chain constraints and labor shortages, the engineering and construction industry has taken a hit over the past few months. However, with a steady increase in spending in the construction sector and rising federal investments, the industry should rebound soon. Given this growth prospect, adding hard-hit quality engineering and construction stocks EMCOR (EME), MYR Group (MYRG) and Argan (AGX) might be a good idea.
The engineering and construction industry has suffered from a variety of headwinds, including soaring raw material costs, labor shortages and worsening supply chain issues aggravated by war. Russian-Ukrainian. This has led to massive sales over the past few months. However, this industry is expected to experience significant growth this year, driven by increased spending on construction projects.
The engineering and construction industry is gearing up for a big move towards connected building capabilities by increasing its investments in digital. Additionally, the Infrastructure Investment and Employment Act is expected to boost the growth of engineering and construction companies in the long run.
EMCOR Group, Inc. (EME)
EME provides electrical and mechanical engineering, industrial and energy infrastructure and construction services in the US and UK. The company provides design, installation, operation, maintenance, electrical and lighting systems for premises, fire protection and extinguishing systems, plumbing and piping systems for high purity, control and filtration systems, cranes and rigging, millwright services and construction services.
Last month, EME announced that its board had authorized a new share buyback program to repurchase up to an additional $200 million of its outstanding common stock. The company had nearly $88.70 million remaining under previous share buyback authorizations on April 22. This new share buyback program could strengthen the shareholder value of the company.
EME’s board of directors declared a regular quarterly cash dividend of $0.13 per share in the same month. The dividend was paid on April 29 to shareholders. The dividend payment consistently reflects the company’s strong capital base and consistent cash generation.
In the first quarter of Fiscal 2022 ended March 31, 2022, EME revenue increased 12.5% year-over-year to $2.59 billion, while Total Operations segment revenue in United States rose 13% year-on-year to $2.46 billion. Its gross profit improved 3.4% from the previous year’s value to $352.56 million. Additionally, the company’s net periodic retirement income increased 28.7% year over year to $1.17 million.
Analysts expect EME EPS to rise 7.6% year-over-year to $7.60 for its fiscal year 2022, ending December 2022. It topped consensus EPS estimates in three of the last four quarters. The consensus revenue estimate of $10.62 billion for the current year represents a 7.2% increase over the prior year. Additionally, the company has exceeded consensus revenue estimates in each of the past four quarters.
The stock is down 20.4% year-to-date and 15.2% over the past year. It closed yesterday’s trading session at $101.37.
EME POWR Rankings reflect this promising prospect. It has an overall rating of B, which is equivalent to Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
EME has a B rating for value, stability, and quality. In category B Industrial -Services industry, it is ranked #9 out of 91 stocks.
To view additional POWR (momentum, growth and sentiment) ratings for EME, Click here.
MYR Group Inc. (MYRG)
MYRG provides electrical construction services in the United States and Canada. The Company operates through two segments: Transmission and Distribution; and commercial and industrial. The Transmission and Distribution segment provides a wide range of services on electricity transmission and distribution networks and substation facilities. Its Commercial and Industrial segment offers a range of services, including the design, installation and repair of industrial wiring, and the installation of traffic networks, roadway lighting, bridges and tunnels.
On May 5, MYRG announced a new share buyback program that allows the company to repurchase up to $75 million of its outstanding common stock. “We are committed to creating value for all MYR Group shareholders and channeling capital into investments that generate strong returns. Today’s announcement reflects the board’s confidence in the company’s long-term strategy and our belief that our shares represent an attractive long-term investment opportunity,” said Rick Swartz, chairman and CEO of MYRG.
In January, MYRG’s Canadian subsidiary, MYR Group Construction Canada, Ltd. acquired all of the issued and outstanding shares in the capital stock of Powerline Plus Ltd. and its affiliate. Powerline Plus companies bring a high quality workforce and a strong management team that provides excellent customer service. The addition of Powerline Plus Companies to MYRG will strengthen its Transmission & Distribution segment’s service offerings and expand the company’s market position.
MYRG’s contract revenue increased 7.4% year-over-year to $636.62 million in the first quarter of fiscal 2022 ended March 31, 2022. Its gross profit improved 4. 6% year-on-year to $80.49 million. His EBITDA was $39.56 million for the first quarter. The company’s net profit and earnings per share were $20.69 million and $1.21, respectively, indicating a year-over-year increase of 3.8% and 3.4%. . In addition, net cash flow from financing activities amounted to $37.97 million.
The consensus revenue estimate of $719.07 million for the third quarter of fiscal 2022 ending September 2022 represents a growth of 17.8% over the same value in 2021. Not surprisingly that MYRG has exceeded consensus earnings estimates in three of the last four quarters. The consensus EPS estimate of $1.44 indicates a 20.3% year-over-year increase for the fourth quarter, ending December 2022. Additionally, it topped consensus EPS estimates at during each of the last four quarters.
MYRG shares are down 23.9% year-to-date and 26.3% over the past six months. It closed yesterday’s trading session at $84.10.
MYRG’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
Within the B-rated Industrial – Services sector, it is ranked No. 32 out of 91 stocks. To view additional POWR (Momentum, Quality, Value, Stability, Sentiment, and Growth) ratings for MYRG, Click here.
Argan, Inc. (AGX)
AGX focuses on the engineering, procurement and construction of natural gas power plants and renewable energy facilities. In addition, it provides commissioning, operations management, maintenance, project development, technical and consulting services to the power generation and renewable energy markets through its Gemma Power Systems operations. and Atlantic Projects Company. The company operates through Power Industry Services; Industrial manufacturing and field services; and telecommunications infrastructure services.
Last month, AGX announced that its board of directors had approved an increase in the company’s existing share buyback program from $50 million to $75 million. The company is committed to an organized capital allocation strategy that balances returning capital to its shareholders and investing in the business to accelerate growth. With this development, AGX should create greater value for shareholders.
During the fourth quarter of fiscal 2022 ended January 31, 2022, AGX’s revenue increased 7.1% year over year to $125.57 million. The company’s gross profit was $22.23 million for the fourth quarter. His other net income rose 577.9% year over year to $983,000. Additionally, its cash and cash equivalents and current assets were $350.47 million and $507.28 million, respectively, as of January 31.
Analysts expect AGX’s revenue for fiscal 2023 ending January 2023 to be $565.15 billion, an 11% year-over-year increase. Street expects the company’s EPS to reach $3.48 for fiscal 2024, recording a 32.6% increase over last year. The company has an impressive earnings track record, beating consensus EPS estimates in three of the past four quarters.
The stock has plunged 20% in the past six months and 24.4% in the past year. It closed yesterday’s trading session at $35.86.
AGX’s POWR ratings reflect this strong outlook. It has an overall rating of B, which is equivalent to Buy in our proprietary rating system.
AGX has an A rating for quality and a B for sentiment. In category B Industrial – Building Materials industry, it is ranked No. 13 out of 48 stocks.
To view additional POWR (Growth, Momentum, Value, and Stability) ratings for AGX, Click here.
EME shares were trading at $102.62 per share on Friday morning, up $1.25 (+1.23%). Year-to-date, the EME is down -19.27%, compared to a -15.18% rise in the benchmark S&P 500 over the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using its fundamental approach to stock analysis, Mangeet seeks to help retail investors understand the underlying factors before making investment decisions.
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