Argan Story

AGX -- USA Stock

USD 41.64 0.24 0.57%

Macroaxis Story

As many investors are getting excited about industrials space, it is fair to break down Argan Inc. We will evaluate why we are still confident in anticipation of a recovery. Is Argan Inc valuation sustainable? Here I will cover a perspective on valuation of Argan to give you a better outlook on taking a position in this stock.

Published over two weeks ago

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Should I rely on Argan management in October 2020?

Argan Inc has 2.16 M in debt with debt to equity (D/E) ratio of 0.01, which may show that the firm is not taking advantage of profits from borrowing. The entity has a current ratio of 2.58, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Argan has an asset utilization ratio of 60.91 percent. This suggests that the company is making $0.61 for each dollar of assets. An increasing asset utilization means that Argan Inc is more efficient with each dollar of assets it utilizes for everyday operations.

We determine the current worth of Argan Inc using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Argan Inc based exclusively on its fundamental and basic technical indicators. By analyzing Argan's financials, quarterly and monthly indicators, and related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Argan's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Argan. We calculate exposure to Argan's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Argan's related companies.

Argan Inc Investment Alerts

Argan investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Argan Inc performance across your portfolios.Please check all investment alerts for Argan

Argan Valuation Ratios as Compared to Competition

Our valuation model uses many indicators to compare Argan value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Argan competition to find correlations between indicators driving the intrinsic value of Argan.

How Argan utilizes its cash?

To perform a cash flow analysis of Argan, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Argan is receiving and how much cash it distributes out in a given period. The Argan cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Argan Net Cash Flow from Operations is fairly stable at the moment as compared to the past year. Argan reported Net Cash Flow from Operations of 53.56 Million in 2019

Argan exotic insider transaction detected

Legal trades by Argan insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:

Argan insider trading alert for general transaction of option to purchase common stock by William Griffin, Non-Exec. Chairman of Gemma, on 22nd of September 2020. This event was filed by Argan Inc with SEC on 2020-09-22. Statement of changes in beneficial ownership - SEC Form 4. William Griffin currently serves as director, vice chairman of gemma power systems and ceo of gemma power systems of Argan Inc [view details]

Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Breaking it down a bit more

The current indifference towards the small price fluctuations of Argan Inc could raise concerns from investors as the firm closed today at a share price of 41.84 on 74,073 in volume. The company executives did not add any value to Argan investors in August. However, most investors can still diversify their portfolios with Argan Inc to hedge their inherited risk against high-volatility market scenarios. The stock standard deviation of daily returns for 30 days investing horizon is currently 2.54. The current volatility is consistent with the ongoing market swings in August 2020 as well as with Argan unsystematic, company-specific events.

Margins Breakdown

Argan profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Argan itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Argan profit margins.

	Operating Margin	(23.98)
	EBITDA Margin	(0.19)
	Gross Margin	(0.0297)
	Profit Margin	(0.18)

Argan Earnings Before Interest Taxes and Depreciation Amortization EBITDA is decreasing over the last 8 years. Argan Earnings Before Interest Taxes and Depreciation Amortization EBITDA is fairly stable at the moment.

Is Argan showing appearance of lower volatility?

The standard deviation is down to 2.63 as of today. Argan Inc currently demonstrates below-verage downside deviation. It has Information Ratio of 0.02 and Jensen Alpha of 0.08. However, we do advice investors to further question Argan Inc expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Final Takeaway

When is the right time to buy or sell Argan Inc? Buying stocks such as Argan isn't very hard. However, what challenging for most investors is doing it at the right time. Proper market timing is something most people cannot do without sophisticated tools, which help to isolate the right opportunities, deliver winning trades and diversify portfolios on a daily bases. To conclude, as of the 5th of September 2020, we believe Argan is currently fairly valued. It follows the market closely and projects close to average chance of bankruptcy in the next two years. Our overall 30 days buy-sell recommendation on the company is Strong Hold.

About Contributor

Ellen Johnson is a Member of Macroaxs Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Argan Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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