Assessing Argan (AGX) Valuation After Texas Power Plant Contract Approval

Argan (AGX) shares are in focus after the company announced that its subsidiary, Gemma Power Systems, received approval to start building a 1,350 MW power plant in Texas. The project’s scale and timeline indicate a substantial addition to Argan’s backlog, as well as meaningful long-term revenue visibility.

See our latest analysis for Argan.

Argan’s momentum has continued to build, with a 32% share price return over the past three months and a total shareholder return of 127.9% over the past year. Investors appear to be responding positively to the large Texas project and the company’s strengthening long-term outlook, showing confidence that growth drivers are still firmly in place.

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With recent gains and a massive new contract in hand, the question now is whether Argan’s shares are still undervalued or if the market has already priced in the company’s growth. Could this be the next buying opportunity, or is the optimism running ahead of fundamentals?

Most Popular Narrative: 4.8% Overvalued

Argan's most widely discussed narrative suggests the fair value sits just below the latest closing price, hinting at optimism but also raising questions about premium expectations. Based on these numbers, the narrative sees the stock trading modestly ahead of its projected worth, despite commanding a strong momentum.

Argan’s top growth drivers are its outstanding financial performance, expanding project backlog, exposure to booming energy infrastructure markets, operational excellence, and strategic positioning in both traditional and renewable sectors. These factors, combined with a strong balance sheet and ongoing innovation, position AGX for continued growth and resilience amid evolving industry dynamics.

Read the complete narrative.

Want to know what’s really powering this high price? In the full narrative, you’ll uncover the bold bets driving Argan’s valuation, such as aggressive double-digit revenue growth and future margins that rival industry leaders. The real surprise is that it is not just earnings; several big growth levers are fueling that premium stance. Don’t miss what could be the ultimate reason behind Argan's aspired fair value.

Result: Fair Value of $284.68 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising material costs and ongoing labor shortages could pressure Argan's margins. This may challenge current growth expectations and cast uncertainty on future profitability.

Find out about the key risks to this Argan narrative.

Build Your Own Argan Narrative

If you see the story differently or want to dive deep into the numbers yourself, it's easy to shape your own perspective in just a few minutes. Do it your way

A great starting point for your Argan research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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