AGX · Argan
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $379.96
Note written ·
Price against the kill line
19.3% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $379.96, on record since 11 November 2026. The shares are down 47.9% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $379.96, which would show the shares recovering much of their three-month decline and leading the S&P 500 again. Third-quarter fiscal 2027 backlog above the $2.929 billion reported at 31 January 2026 would point the same way.
Research onlyNot in the portfolio.
Key figures from the filings · Industrials
Quarter to 31 July 2026, filed 2 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 384
- Revenue, change on a year (%)
- +61.5
- Gross margin (%)
- 19.3
- Operating margin (%)
- 14.8
- Free cash flow, four quarters ($M)
- 546
- Net cash, cash less debt ($M)
- 548
- Price to earnings (×)
- 24.0
- Enterprise value to sales (×)
- 3.2
All filed numbers
What Argan reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 384 | +61.5 | 19.3 | 14.8 |
| first filed | 291 | +50.2 | 21.0 | 15.6 |
| first filed | 262 | +12.7 | 25.0 | 18.2 |
| first filed | 251 | −2.3 | 18.7 | 13.0 |
| first filed | 238 | +4.7 | 18.6 | 12.6 |
| first filed | 194 | +22.8 | 19.0 | 12.6 |
| Pre-tax income ($M) | 66.9 |
| Net income ($M) four quarters: 179 | 53.3 |
| Diluted shares, change on a year (%) against the quarter to 31 July 2025 | +0.2 |
| Operating cash flow ($M) | 555 |
| Capital spending ($M) | 9.5 |
| Free cash flow ($M) | 546 |
| Cash and short-term investments ($M) | 548 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 548 |
| Deferred revenue ($M) +97.9% on a year | 627 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 180 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 507 |
| Market value ($M) | 4,300 |
| Enterprise value, market value plus net debt ($M) no debt reported | 3,752 |
| Enterprise value to sales (×) no debt reported | 3.2 |
| Enterprise value to operating income (×) no debt reported | 20.6 |
| Price to earnings (×) | 24.0 |
| Price to book value (×) | 8.5 |
| Free-cash-flow yield (%) | 12.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 7.7% of shares outstanding sold short, 3.4 days of average trading to cover, −12.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $146.8M |
The thesis
Argan's order book shrank in the latest quarter, so the shares are more likely to lag the S&P 500 over three months than to lead it. The third-quarter fiscal 2027 report, expected around 4 December 2026, settles whether new awards are replacing finished work.
Argan reported second-quarter fiscal 2027 revenue of $383.976 million on 2 September 2026, up 61.5% from a year earlier, with diluted earnings per share of $3.76 and a gross margin of 19.3%. Backlog at 31 July 2026 was $2.518 billion, down from $2.929 billion at 31 January 2026. Profit is strong; the open question is the pipeline behind it.
The shares closed at $315.34 on 12 November 2026, down 45.4% over three months (split- and dividend-adjusted closes). They hit a 52-week closing low of $261.21 on 5 November 2026, then rose 10.4% on 9 November 2026 to $306.28. Company news and SEC filings list no announcement for that session. The price reflects a market that expects the earnings peak to arrive in fiscal 2028 and treats the 31 July 2026 backlog decline as the first sign of it.
Bullish and bearish views on Argan, Inc
The bull case on Argan, Inc (AGX), in brief: earnings ran well ahead of forecasts. The bear case: the order book fell.
Bull case
- Earnings ran well ahead of forecasts. Second-quarter earnings per share of $3.76 compared with an estimate of $2.67, according to a 2 September 2026 summary on public.com. The 61.5% revenue growth is a filed number.
- Shareholder payouts are rising. The 9 September 2026 Form 8-K raised the quarterly dividend 40%, from $0.50 to $0.70 per share, paid on 30 October 2026. A $200 million buyback authorization runs through 31 January 2030.
- Upstream turbine demand keeps growing. GE Vernova reported on 28 October 2026 that gas equipment backlog plus slot reservations rose from 116 gigawatts to 122 gigawatts in the third quarter. It targets at least 130 gigawatts by year-end 2026.
- One analyst target sits far above the price. JPMorgan's Overweight rating and $785 target, set 29 September 2026, compare with the $315.34 close on 12 November 2026.
Bear case
- The order book fell. Backlog was $2.518 billion at 31 July 2026 against $2.929 billion at 31 January 2026. A further decline at the next report would show awards are not replacing completed projects.
- Upstream growth is slowing. GE Vernova's gas equipment backlog plus slot reservations rose 6 gigawatts in the third quarter of 2026, from 116 to 122. Of the 122 gigawatts, 58 gigawatts are slot reservations, which are not firm orders.
- An analyst argues the award cycle has peaked. Piper Sandler initiated with Underweight on 9 September 2026, citing limits on available work crews, per The Fly. Its $273 target is below the 12 November 2026 close.
- Customer concentration magnifies project risk. The 10-K risk factors say top customers exceed 60% of revenue, so one delayed or cancelled project can move results.
- The shares trade below both long averages. The 12 November 2026 close of $315.34 sits under the 50-day average of $363.6 and the 200-day average of $516.78 (adjusted closes).
Price setup
The shares closed at $315.34 on 12 November 2026. The 52-week intraday high was $805.75 on 30 June 2026, and the last close is 60.9% below it. The 52-week closing low is $261.21, set on 5 November 2026.
The rebound since that low is short. Closes were $277.50 on 6 November 2026, $306.28 on 9 November 2026, $304.40 on 10 November 2026, $322.00 on 11 November 2026 and $315.34 on 12 November 2026. The rise has not yet reached the 50-day average of $363.6 as of 12 November 2026, and the 200-day average of $516.78 is far higher.
Piper Sandler's $273 target is the nearest named analyst level below the price, and the consensus of the trend remains down. The rebound came with no new backlog data, so the 31 July 2026 order book of $2.518 billion is still the latest measure of work in hand.
No Form 4 insider sale appears since the 23 September 2026 filing, which reported a director's exercise of 895 options at $40.15. The earnings report, expected about three weeks after the last close, is the next event that can change the picture.
Catalysts ahead
- ~4 December 2026 (est.): Argan third-quarter fiscal 2027 report, covering the quarter ended 31 October 2026. The next backlog disclosure shows whether the order book recovers from $2.518 billion; the company has not confirmed the date, and last year's third-quarter report came on 4 December 2025.
What would change the view
A daily close above $379.96, which would show the shares recovering much of their three-month decline and leading the S&P 500 again. Third-quarter fiscal 2027 backlog above the $2.929 billion reported at 31 January 2026 would point the same way.
What it trades with
Argan's awards have historically lagged GE Vernova turbine bookings by two to four quarters, so GE Vernova's 28 October 2026 results frame orders for fiscal 2028. Argan also moves with other power-generation and electrical-equipment shares when investors reassess hyperscaler data-center spending. Backlog is disclosed only quarterly, so between reports the shares react to award press releases and analyst notes.
The evidence, claim by claim (7)
- Second-quarter fiscal 2027 revenue was $383.976 million, up 61.5% from a year earlier; diluted earnings per share were $3.76 and gross margin was 19.3%. Backlog was $2.518 billion at 31 July 2026 versus $2.929 billion at 31 January 2026. Argan 2 September 2026 results release (Exhibit 99.1) · as of
- Argan raised its quarterly dividend 40%, from $0.50 to $0.70 per share, payable 30 October 2026 to holders of record on 22 October 2026. Argan Form 8-K, 9 September 2026 · as of
- Piper Sandler initiated coverage with an Underweight rating and a $273 price target. The Fly via TipRanks, 9 September 2026 · as of
- JPMorgan maintained Overweight and lowered its price target from $800 to $785. GuruFocus; Investing.com, 29 September 2026 · as of
- GE Vernova's gas equipment backlog plus slot reservations rose from 116 gigawatts to 122 gigawatts in the third quarter of 2026, with 58 gigawatts still slot reservations; its year-end target is at least 130 gigawatts. GE Vernova third-quarter 2026 results release (Form 8-K), 28 October 2026 · as of
- Director Peter W. Getsinger exercised options on 895 shares at $40.15 on 22 September 2026. SEC Form 4 filed 23 September 2026 · as of
- The shares closed at $315.34 on 12 November 2026, against a 52-week closing low of $261.21 on 5 November 2026 and a 52-week intraday high of $805.75 on 30 June 2026; the three-month change is −45.4%. Split-adjusted daily closes · as of
Sources
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