AI Builder's Earnings Blow Past Views. Stock Soars 34%.

Argan (AGX) clobbered earnings estimates late Thursday, as the power-plant builder defied expectations of a slowdown, and its backlog continued to grow.

Shares, which were in a precarious spot ahead of the report, rallied more than 30% in morning trading.

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The company reported earnings of $3.47 a share for the January-ended quarter, a year-over-year leap of 56%. Sales rose nearly 13% to $262 million. Analysts polled by FactSet expected earnings of $2 per share. Sales were seen climbing to $255.3 million.

The latest results show Argan’s growth rebounding after slowing over the past four quarters from 149% to 176%, 91% and 9%. The company’s huge growth since 2024 presented tougher comparisons.

Revenue growth slowed from 61% to 57%, 41%, 23% and 5%, followed by a 2% decline over the six quarters prior to the latest report.

CEO David Watson said Argan added $2.5 billion in new contract value during the fiscal year. Its project backlog grew to more than $2.9 billion vs. $1.4 billion a year ago. Demand, he said, remains “exceptionally strong.”

The company’s growth spurt has come largely from feverish construction of data centers for artificial intelligence workloads. Argan specializes in power generation plants, which face surging power demands from data centers. It also works on telecom and industrial construction projects.

“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 added.

He also noted a growing pipeline for gas-fired power plants. In a conference call with analysts, Watson said the backlog is about 77% natural gas projects, 14% renewable energy and 9% industrial projects.

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Argan Added To S&P Index

Argan joined the S&P SmallCap 600 index on Monday. The company’s market capitalization has now grown to about $5.7 billion.

Arlington, Va.-based Argan has a Composite Rating of 95 and an EPS Rating of 92. The stock is up more than 75% year to date.

Argan stock soared 34% in the first half hour of trading Friday, jumping off support at the 50-day moving average, IBD MarketSurge shows. The stock climbed to an all-time high, and its relative strength line also is at new highs.

Further declines below that level would have been a bearish signal. But a rebound back above the line is a clear positive sign. Investors could use Friday’s move to new highs as an entry. But keep in mind that shares are already more than 30% above the 50-day line, and market risk remains quite high.

The stock had climbed as much as 23% from an alternative buy point at 400. But Argan round-tripped that entire move Friday morning. That’s a sell signal for investors who purchased shares around the 400 level. Today’s rally, however, is bullish.

Argan stock has an elevated 21-day average true range (ATR) of 6.44%. The average true range, available on IBD MarketSurge, gauges the characteristic breadth of a stock’s behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.

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