Shares of Argan (AGX +4.82%) spiked on Friday after the engineering company reported stronger-than-expected quarterly profits.
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AI-fueled gains
With nearly two decades of experience in power plant construction, Argan is well positioned to profit from soaring demand for cost-effective energy infrastructure required by artificial intelligence (AI) factories.
Argan's revenue rose 13% year over year to $262 million in its fiscal 2026 fourth quarter, which ended on Jan. 31.
NYSE: AGX
Key Data Points
Argan's profit margins climbed alongside its revenue as projects like the Trumbull Energy Center in Ohio neared completion. Its gross margin increased to 25% from 20.5% in the prior-year quarter.
The construction company's net income, in turn, jumped 57% to $49 million, or $3.47 per share. That was well above Wall Street's estimates, which had called for per-share profits of $1.98.
Multiple growth drivers
Argan's project backlog rose to $2.9 billion as of Jan. 31, reflecting strong and rapidly growing demand for its services.
"We are seeing a robust pipeline of opportunities to build new gas-fired power plants capable of delivering reliable, high-quality power on a 24/7 basis," CEO David Watson said.
Importantly, Argan is well funded, with $895 million in cash and investments and no debt. That should enable Argan to capitalize on its numerous expansion prospects.
"The rapid growth of AI and data centers, the electrification of everything, the replacement of aging power facilities, and a prolonged period of underinvestment in power infrastructure are placing increasing pressure on our power grids," Watson said.
