Comparing Argan (NYSE:AGX) & Masco (NYSE:MAS)

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

Dividends

Argan pays an annual dividend of $2.00 per share and has a dividend yield of 0.5%. Masco pays an annual dividend of $1.24 per share and has a dividend yield of 1.8%. Argan pays out 23.6% of its earnings in the form of a dividend. Masco pays out 31.8% 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 increased its dividend for 2 consecutive years and Masco has increased its dividend for 12 consecutive years. Masco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

79.4% of Argan shares are held by institutional investors. Comparatively, 93.9% of Masco shares are held by institutional investors. 6.7% of Argan shares are held by company insiders. Comparatively, 0.5% of Masco shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Argan and Masco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Argan	$915.03 million	5.52	$85.46 million	$8.49	42.89
Masco	$7.60 billion	1.84	$822.00 million	$3.90	17.24

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

Analyst Ratings

This is a breakdown of current ratings for Argan and Masco, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Argan	0	4	3	1	2.63
Masco	0	12	6	0	2.33

Argan currently has a consensus price target of $355.20, suggesting a potential downside of 2.46%. Masco has a consensus price target of $73.20, suggesting a potential upside of 8.88%. Given Masco’s higher possible upside, analysts clearly believe Masco is more favorable than Argan.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Argan	13.11%	31.38%	13.47%
Masco	10.89%	1,317.38%	16.47%

Volatility and Risk

Argan has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Masco has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500.

Summary

Masco beats Argan on 10 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 Masco

Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally. The company's Plumbing Products segment offers faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, sinks, toilets, acrylic tubs, shower trays, spas, exercise pools, and fitness systems; brass, copper, and composite plumbing system components; connected water products; thermoplastic solutions, extruded plastic profiles, specialized fabrications, and PEX tubing products; and other non-decorative plumbing products. This segment provides its products under the DELTA, BRIZO, PEERLESS, HANSGROHE, AXOR, KRAUS, EASY DRAIN, STEAMIST, ELITESTEAM, GINGER, NEWPORT BRASS, BRASSTECH, WALTEC, BRISTAN, HERITAGE, MIROLIN, HOT SPRING, CALDERA, FREEFLOW SPAS, FANTASY SPAS, ENDLESS POOLS, BRASSCRAFT, PLUMB SHOP, COBRA, COBRA PRO, and MASTER PLUMBER brands. Its Decorative Architectural Products segment offers paints, primers, specialty coatings, stains, and waterproofing products, as well as paint applicators and accessories; cabinet and door hardware, functional hardware, wall plates, hook and rail products, closet organization systems, and picture hanging accessories; decorative bath hardware, mirrors, and shower accessories and doors; and decorative indoor and outdoor lighting fixtures, ceiling fans, landscape lighting, and LED lighting systems. This segment provides its products under the BEHR, KILZ, WHIZZ, Elder & Jenks, LIBERTY, BRAINERD, FRANKLIN BRASS, KICHLER, and ÉLAN brands. It sells its products to the plumbing, heating, and hardware wholesalers; home centers and online retailers; hardware stores; electrical and landscape distributors; lighting showrooms; building supply outlets; and other mass merchandisers. Masco Corporation was incorporated in 1929 and is headquartered in Livonia, Michigan.