Argan, Inc.: Underestimated Winner in the Energy Boom - 61% Sales Growth in Q2
- Revenue well above forecast: 61% increase in revenue thanks to strong demand for energy infrastructure.
- Focus on conventional and renewable energy projects: From the construction of natural gas power plants - to large solar and battery storage projects.
- Positioned for further growth: Argan benefits from global megatrends such as the growing demand for power supply from data centers and electric vehicles.
Argan, Inc., a construction company specializing in energy infrastructure, presented impressive figures in the second quarter of the 2025 financial year: A 61% increase in revenue to $227 million ($35.95 million above expectations) and net income of $18 million, or $1.31 per share (34 cents above forecasts). This was the strongest result since 2017 and demonstrates Argan's ability to meet the increasing demands on energy infrastructure.
The biggest contributor to growth was Power Services, which accounts for 77% of Argan's revenue and saw a 65% jump in revenue. This included important projects such as the Trumbull Energy Center, a 950-megawatt natural gas power plant in Ohio. This project exemplifies Argan's strategy of further expanding conventional energy sources in order to ensure the stability of the electricity grid. At the same time, the proportion of renewable energies in Argan's portfolio is steadily increasing. Renewable energy projects, such as large solar and battery storage projects in Illinois, account for around $570 million of the $1 billion project portfolio.
Argan is benefiting from several global megatrends: The boom in data centers, driven by the growing use of AI, is significantly increasing the demand for reliable power supply. Goldman Sachs estimates that the energy consumption of data centers will increase by 160 % by 2030. The spread of electric vehicles (EVs) also opens up great opportunities. According to PWC, the annual electricity load from EVs in the US could grow from 24,000 GWh in 2023 to 468,000 GWh by 2040 - equivalent to 9-12% of projected US grid capacity. With the expected increase from 4.5 million EVs in 2023 to up to 90 million by 2040, there is a huge need for charging infrastructure and additional electricity capacity - areas where Argan is playing an active role.
In recent years, Argan has overcome a variety of challenges, especially since the end of 2017, when the decline in major projects and delays in new orders, as well as the pandemic, put pressure on revenues. To respond to these difficulties, Argan has specifically diversified its project portfolio and strengthened its Industrial Services (TRC) division, which grew by 52% in the last quarter. This division focuses on construction projects in high-growth sectors such as petrochemicals, agriculture and water management. By diversifying and strengthening this segment, TRC is helping to stabilize Argan's business, which is particularly important in the fast-growing Southeast region of the United States.
CEO David Watson emphasized the company's ability to serve both sides of the energy landscape - conventional and renewable. While the demand for renewable energy is increasing, natural gas remains an essential component of energy security. Argan has responded to these market developments by increasing operational efficiencies and focusing on strategic acquisitions to secure future growth. Thanks to a strong balance sheet with $485 million in cash and no debt, the company is well positioned to drive both organic and acquisitive growth over the long term.
Conclusion: With an expected P/E ratio of 22 and a market capitalization of $1.16 billion, which is almost equal to the order backlog, the stock market does not yet seem to have fully grasped Argan's potential - as evidenced by the significant underestimation of the quarterly figures.
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