It has been about a month since the last earnings report for Argan (AGX Quick QuoteAGX - Free Report) . Shares have lost about 7.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Argan due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Argan, Inc. before we dive into how investors and analysts have reacted as of late.

Argan Q2 Earnings & Revenue Beat, Gross Margin Up Y/Y

Argan delivered a sharp beat for the second quarter of fiscal 2027 (ended July 31, 2026), with earnings and revenues topping the Zacks Consensus Estimate and growing year over year.

The quarterly results reflected higher activity across all three business segments, led by construction ramp-ups in Power and stronger field services and vessel fabrication in Industrial. Project backlog stood at $2.5 billion as of July 31, 2026.

AGX’s Q2 Highlights

The company’s quarterly earnings of $3.76 per share rose 50.4% year over year and topped the Zacks Consensus Estimate of $2.68 by 40.3%.

Revenues increased 61.5% year over year to $384 million and surpassed the consensus mark of $298 million by 29%.

Consolidated gross profit rose 67.7% to $74.2 million, while gross margin expanded to 19.3% from 18.6%. Selling, general and administrative expenses increased 22.5% to $17.4 million but declined to 4.5% of revenues from 6% in the year-ago period.

Adjusted EBITDA climbed to $70 million from $38.49 million year over year, with margin improving to 18.2% from 16.2%.

AGX's Power Segment Leads Revenue Growth

The Power segment generated $301.2 million in quarterly revenues, up 52.9% year over year and representing 78.4% of consolidated revenues. Growth reflected increased construction activity on the 1.4 GW Thermal Project, 700 MW Combined-Cycle Project, 1.2 GW Power Station and 860 MW Thermal Project.

Power gross margin improved to 22.4% from 19.6% a year earlier. Management attributed the consolidated gross margin improvement primarily to changing project and contract mix and strong execution in the Power segment.

Argan's Industrial Sales More Than Double

Industrial revenues surged 111.2% to $76.2 million as field-services construction activity and vessel fabrication increased. The segment accounted for 19.8% of consolidated revenues, up from 15.2% in the prior-year quarter.

Industrial gross margin, however, fell to 7.3% from 12.5%. Argan is constructing an additional fabrication facility in Farmville, NC, to support a contract for approximately 2,000 horizontal pressure vessels for thermal energy storage and chilled-water cooling systems. Completion is expected in the third quarter of fiscal 2027.

AGX Expands Teledata With ValCor Acquisition

Teledata revenues increased 39.5% to $6.6 million. Its gross margin declined to 16.6% from 24.7%, while the segment posted a pretax loss of $0.2 million for the quarter.

On July 31, 2026, Argan acquired ValCor Communications for total consideration of approximately $9.4 million. Since the acquisition closed on the final day of the quarter, ValCor contributed no revenues or earnings to the reported period. The deal extends Teledata's reach into New England and adds defense and aerospace customers.

AGX's Balance Sheet Supports Capital Deployment

Cash, cash equivalents and investments totaled $1.03 billion as of July 31, 2026, up from $895 million as of Jan. 31, 2026. Net liquidity increased to $440.4 million from $421 million, and AGX had no debt. Operating cash flow for the first six months of fiscal 2027 was $210.4 million.

Argan used $14 million for dividends, $9.6 million for share repurchases and $8 million, net of cash acquired, for the ValCor transaction during the first half. The quarterly dividend was 50 cents per share, equivalent to an annual rate of $2.00 per share.

Argan's Backlog Frames the Growth Outlook

The presentation characterized the backlog as fully committed by customers and actively being worked on. It showed 91% supporting the electric economy, comprising 80% natural gas and 11% renewable projects, while Industrial represented 8%. The backlog was $411 million below its Jan. 31 level.

The company estimates that about 48% of remaining unsatisfied performance obligations will be recognized as revenues over the next 12 months, with substantially all the remainder expected within the following 12 to 24 months. Management cited data centers, electric vehicles and reshoring of manufacturing as demand drivers, while equipment constraints, interconnection delays, specialized labor availability and tariffs could affect project costs and timing.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in estimates review.

The consensus estimate has shifted 10.23% due to these changes.

VGM Scores

At this time, Argan has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Argan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.