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

Dividends

Argan pays an annual dividend of $0.70 per share and has a dividend yield of 1.1%. AECOM does not pay a dividend. Argan pays out 13.9% of its earnings in the form of a dividend.

Institutional and Insider Ownership

82.1% of AECOM shares are held by institutional investors. Comparatively, 86.7% of Argan shares are held by institutional investors. 1.1% of AECOM shares are held by insiders. Comparatively, 7.6% of Argan shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares AECOM and Argan’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AECOM $17.67 billion 0.30 $790.46 million $1.64 20.43
Argan $775.19 million 1.28 $126.79 million $5.05 12.70

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

Analyst Ratings

This is a breakdown of current recommendations for AECOM and Argan, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AECOM 0 5 4 0 2.44
Argan 0 2 1 0 2.33

AECOM currently has a consensus target price of $35.11, indicating a potential upside of 4.81%. Argan has a consensus target price of $71.00, indicating a potential upside of 10.68%. Given Argan’s higher possible upside, analysts clearly believe Argan is more favorable than AECOM.

Risk & Volatility

AECOM has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500. Comparatively, Argan has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
AECOM 1.46% 12.19% 3.29%
Argan 10.15% 27.78% 13.15%

Summary

Argan beats AECOM on 10 of the 16 factors compared between the two stocks.

AECOM Company Profile

AECOM is engaged in designing, building, financing and operating infrastructure assets for governments, businesses and organizations. The Company’s segments include design and consulting services (DCS), construction services (CS) and management services (MS). Its DCS segment is engaged in planning, consulting, architectural and engineering design services to commercial and government clients in major end markets, such as transportation, facilities, environmental, energy, water and government. Its CS segment is engaged in construction services, including building construction and energy, infrastructure and industrial construction, primarily in the Americas. Its MS segment is engaged in programming and facilitating management and maintenance, training, logistics, consulting, technical assistance, and systems integration and information technology services, primarily for agencies of the United States government and other national governments.

Argan Company Profile

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.

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