Argan, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

A week ago, Argan, Inc. (NYSE:AGX) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$87m, some 3.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.36, 700% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Argan

Taking into account the latest results, the current consensus from Argan's two analysts is for revenues of US$394.4m in 2021, which would reflect a sizeable 44% increase on its sales over the past 12 months. Earnings are expected to improve, with Argan forecast to report a statutory profit of US$1.07 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$379.4m and earnings per share (EPS) of US$0.68 in 2021. So it seems there's been a definite increase in optimism about Argan's future following the latest results, with a very substantial lift in the earnings per share forecasts in particular.

It will come as no surprise to learn that the analysts have increased their price target for Argan 7.5% to US$57.00on the back of these upgrades.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Argan is forecast to grow faster in the future than it has in the past, with revenues expected to grow 44%. If achieved, this would be a much better result than the 9.4% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 4.4% next year. So it looks like Argan is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Argan following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

Before you take the next step you should know about the 1 warning sign for Argan that we have uncovered.

This article by Simply Wall St is general in nature. 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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