Argan Inc (NYSE:AGX) Reports Mixed Q2 FY2026 Results with EPS Beat and Revenue Miss

Argan Inc (NYSE:AGX) reported its second quarter fiscal 2026 results, delivering a mixed performance relative to analyst expectations. While the company posted robust earnings growth, revenue came in slightly below consensus estimates, contributing to notable after-hours trading activity.

Quarterly Performance Highlights

The company reported quarterly revenues of $237.7 million, representing a 4.7% increase from the $227.0 million reported in the same quarter last year. However, this figure fell short of the analyst consensus estimate of $246.4 million. Despite the revenue miss, Argan demonstrated significant operational improvements with gross profit reaching $44.3 million, up substantially from $31.1 million in the prior year period. Gross margin expanded to 18.6% from 13.7%, reflecting improved project execution and cost management.

The standout performance came in earnings per share, where Argan reported diluted EPS of $2.50, significantly exceeding the analyst estimate of $1.66. This represents a 91% increase from the $1.31 reported in the second quarter of fiscal 2025. Net income showed remarkable strength at $35.3 million, nearly doubling from $18.2 million in the comparable prior year quarter.

Market Reaction and Price Action

Following the earnings release, the market reaction has been notably negative in after-hours trading, with the stock declining approximately 6.7%. This reaction appears to reflect investor concern over the revenue miss despite the strong earnings beat. The market's focus on the top-line shortfall suggests that investors may be weighing revenue growth more heavily than bottom-line performance in the current environment.

The stock's recent performance shows mixed signals:

• Last week: +4.8%
• Last two weeks: +10.2%
• Last month: +3.4%

This indicates that while the stock had been gaining momentum leading into earnings, the after-hours decline suggests the results did not meet market expectations for overall growth.

Operational and Financial Strength

Argan's operational performance showed several positive indicators beyond the headline numbers:

• EBITDA increased to $36.2 million from $24.8 million year-over-year
• EBITDA margin expanded to 15.2% from 10.9%
• Cash, cash equivalents and investments grew to $572.2 million from $525.1 million at January 31, 2025
• The company maintained a debt-free balance sheet with strong liquidity

Project backlog reached a record $2.0 billion as of July 31, 2025, up significantly from $1.4 billion at the beginning of the fiscal year. This substantial backlog growth provides visibility into future revenue streams and suggests strong demand for the company's services across its business segments.

Management Commentary and Outlook

President and CEO David Watson highlighted the company's "continued momentum" and "excellent execution" across projects. He noted the completion of several key project milestones, including an LNG project in Louisiana and progress on renewable energy projects. Watson emphasized the company's positioning to benefit from "the urgent need for reliable energy resources to strengthen the power grid."

While the press release did not provide specific forward guidance, the record backlog and management's positive commentary about market opportunities suggest confidence in future growth prospects. Analysts currently estimate full-year 2026 revenue of $968.0 million and Q3 2026 revenue of $253.7 million.

Conclusion

Argan's second quarter results present a complex picture of strong profitability improvement coupled with revenue that fell slightly short of expectations. The market's negative after-hours reaction appears to reflect disappointment with the top-line performance, though the significant earnings beat and strong operational metrics suggest underlying business strength.

The company's record backlog, debt-free balance sheet, and positioning in the growing power infrastructure market provide a solid foundation for future growth. However, investors will be watching closely to see if the company can translate its strong project pipeline into revenue that meets or exceeds expectations in coming quarters.

For more detailed earnings information and analyst estimates, visit the AGX earnings page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The author has no position in AGX stock. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.