Sep 28 2026 10:37 PM EST

Argan Shares Slide as Investors Reassess Power‑EPC Outlook

Argan, Inc. (NYSE: AGX) posted an 8% increase in revenue and a 61% jump in net income for FY2026, but its shares have fallen 52% over the past three months, leaving the stock below its 50‑day moving average of $579.76 and trading near its 200‑day average of $584.64.

Fiscal 2026 revenue reached $944.6 million (+8.1% YoY), driven by the Power segment ($756.5 million, 80.1% of total). Gross profit margin improved to 20.5% from 16.1% a year earlier, and diluted EPS rose to $9.74. Cash and cash equivalents grew to $339.5 million, and the company’s unsatisfied performance obligations expanded to $2.9 billion. The board increased the quarterly dividend to $0.50 per share and repurchased 19,754 shares for roughly $117 million in the fourth quarter of FY2026.

Backlog Expansion Meets Conversion Risk

The company’s backlog grew from $1.4 billion at the end of FY2025 to $2.9 billion in FY2026, reflecting new EPC awards such as an 860 MW natural‑gas plant in ERCOT and a 1.4 GW combined‑cycle project in Texas. While the larger order book supports long‑term revenue visibility, analysts note that a significant portion of the backlog is still years away from execution, creating near‑term conversion uncertainty.

Macro and Sector Pressures

Investors are weighing broader headwinds that could dampen demand for large‑scale power‑generation projects. Rising natural‑gas prices, recent tariffs on steel and aluminum, and a shift toward renewable‑energy and storage solutions reduce the immediate appetite for new gas‑fired combined‑cycle plants. In addition, higher interest rates and tighter financing conditions increase the cost of capital for EPC contractors.

Legal and Operational Risks

A March 2025 lawsuit filed by the company’s U.K. subsidiary against EP NI Energy Ltd. and EP UK Investment Ltd. involves a disputed $10 million irrevocable letter of credit, which remains recorded as a receivable and adds litigation risk. A prior cybersecurity incident in fiscal 2024 resulted in a $2.7 million loss, highlighting operational vulnerabilities.

Shareholder Returns and Insider Activity

The board’s decision to raise the quarterly dividend to $0.50 per share and to extend a $150 million share‑repurchase program through January 2027 signals confidence in cash generation. However, insiders have sold roughly 127,973 shares (≈$87.6 million) over the past three months, and the company’s beta of 0.57 suggests lower volatility, yet the stock’s recent 3‑month performance of ‑52.4% indicates a sharp market correction.