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Should You Dump Aegion (AEGN) Stock from Your Portfolio?
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Aegion Corporation has been disappointing investors of late. Shares of this global leader in infrastructure protection and maintenance has dipped 3.4% year to date.
Estimates Moving South
The estimates for the company for first-quarter 2017, fiscal 2017 and fiscal 2018, have moved south in the past 30 days, reflecting the negative outlook of analysts. For the first quarter, the estimate has gone down 4% to 23 cents per share in the past 30 days.
For fiscal 2017, the estimate has dropped 5% to $1.46 in the past 30 days. For fiscal 2017, the estimate has declined 4% to $1.44 per share over the same time frame.
Near-Term Headwinds Remain
Aegion believes that the CIPP rehabilitation market in North America will grow by low single-digits in 2017. However, dismal condition of the U.S. water and wastewater infrastructure remains a concern. While the new administration in Washington will provide support for water and wastewater pipeline rehabilitation, the long-term need to rehabilitate municipal pipelines will remain an issue.
Aegion expects that two cost-related headwinds are likely to affect the industry in North America in 2017. The first is an increase in fuel and resin costs as oil prices rebound from low levels of early 2016. These costs represent 15–20% of Infrastructure Solutions cost of sales. The second factor concerns a tighter market for the U.S. construction labor which may put pressure on wages. While these costs are being passed on to the market on current big bids, the margins in backlog could be affected.
The company’s stretched valuation is a concern. In case of Aegion Corporation, the trailing twelve months price earnings (P/E) ratio is 20.65 while the Building and Construction Products-Miscellaneous sub industry's average trailing twelve months P/E ratio is lower at 17.51. This implies that the stock is overvalued and hence, we caution the investors against entering the stock at this point.
Unfavorable Zacks Rank
Aegion Corporation currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the sector include Owens Corning (OC - Free Report) , NCI Building Systems, Inc. and TopBuild Corp. (BLD - Free Report) . Owens Corning has an average positive earnings surprise of 35.13% in the trailing four quarters and carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NCI Building has an average earnings surprise of 3.92% in the last four quarters, while TopBuild has an average earnings surprise of 27.38% in the past four quarters. Both carry a Zacks Rank #2 (Buy).
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Should You Dump Aegion (AEGN) Stock from Your Portfolio?
Aegion Corporation has been disappointing investors of late. Shares of this global leader in infrastructure protection and maintenance has dipped 3.4% year to date.
Estimates Moving South
The estimates for the company for first-quarter 2017, fiscal 2017 and fiscal 2018, have moved south in the past 30 days, reflecting the negative outlook of analysts. For the first quarter, the estimate has gone down 4% to 23 cents per share in the past 30 days.
For fiscal 2017, the estimate has dropped 5% to $1.46 in the past 30 days. For fiscal 2017, the estimate has declined 4% to $1.44 per share over the same time frame.
Near-Term Headwinds Remain
Aegion believes that the CIPP rehabilitation market in North America will grow by low single-digits in 2017. However, dismal condition of the U.S. water and wastewater infrastructure remains a concern. While the new administration in Washington will provide support for water and wastewater pipeline rehabilitation, the long-term need to rehabilitate municipal pipelines will remain an issue.
Aegion expects that two cost-related headwinds are likely to affect the industry in North America in 2017. The first is an increase in fuel and resin costs as oil prices rebound from low levels of early 2016. These costs represent 15–20% of Infrastructure Solutions cost of sales. The second factor concerns a tighter market for the U.S. construction labor which may put pressure on wages. While these costs are being passed on to the market on current big bids, the margins in backlog could be affected.
Falling Behind the Industry
Aegion’s stock has gained 9.3% in the past one year, falling way behind the Zacks categorized Building and Construction Products - Miscellaneous sub industry’s increase of 32% in the same time frame.
Expensive Valuation
The company’s stretched valuation is a concern. In case of Aegion Corporation, the trailing twelve months price earnings (P/E) ratio is 20.65 while the Building and Construction Products-Miscellaneous sub industry's average trailing twelve months P/E ratio is lower at 17.51. This implies that the stock is overvalued and hence, we caution the investors against entering the stock at this point.
Unfavorable Zacks Rank
Aegion Corporation currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the sector include Owens Corning (OC - Free Report) , NCI Building Systems, Inc. and TopBuild Corp. (BLD - Free Report) . Owens Corning has an average positive earnings surprise of 35.13% in the trailing four quarters and carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NCI Building has an average earnings surprise of 3.92% in the last four quarters, while TopBuild has an average earnings surprise of 27.38% in the past four quarters. Both carry a Zacks Rank #2 (Buy).
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>