Back to top

Image: Bigstock

Aegion's Arm to Rehabilitate Phoenix's Wastewater Pipelines

Read MoreHide Full Article

Aegion Corporation’s (AEGN - Free Report) subsidiary — Insituform Technologies, LLC or Insituform — has won a contract from the City of Phoenix, AZ, in order to rehabilitate more than 32 miles of 8 to 15-inch wastewater pipelines using Insituform cured-in-place pipe (“CIPP”).

The contract, which is expected to start in mid-2019, is valued at $5 million. In the past three years, the company has completed rehabilitation of more than 75 miles of pipelines within the city.

Aegion remains committed to maintain its market leadership position in the rehabilitation of wastewater pipelines in North America using CIPP technology, the largest contributor to top-line growth. Notably, the company’s Infrastructure Solutions business, which accounted for 44.5% of 2018 revenues, offers a diverse portfolio of solutions in a highly fragmented and growing market.

Notably, in 2018, the company’s adjusted earnings grew 17% despite a 2% decrease in consolidated revenues. The upside mainly stemmed from strong Infrastructure Solutions business, significant top and bottom-line growth from Energy Services, as well as solid execution on multiple coating projects within Corrosion Protection.

Aegion’s total and Infrastructure Solutions backlog at the end of 2018 (excluding exited or to-be-exited businesses) advanced 5% y/y each, driven by increases within North America CIPP.

However, the company has been witnessing unfavorable project mix in North America CIPP operations, and top-line weakness in pipe coating and insulation operation. In fourth-quarter 2018, Infrastructure Solutions revenues declined 4.7% year over year. Due to the absence of a large project to replace the contribution from Middle East coating projects, it expects overall 2019 revenues to decline within 2-4% from a year ago.

Nevertheless, after adjusting for exited or to-be-exited businesses, 2019 consolidated revenues are expected to grow 2-4% from the 2018 level. Notably, Aegion’s shares have gained 7.3% in the past month compared with its industry’s growth of 1.3%.

In 2019, the company anticipates top-line and profitability improvements in Infrastructure Solutions, Energy Services and the cathodic protection business within Corrosion Protection.
Zacks Rank & Key Picks

Aegion currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same space include Armstrong World Industries, Inc. (AWI - Free Report) , Patrick Industries, Inc. (PATK - Free Report) and Arcosa, Inc. (ACA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Armstrong World’s earnings for the current year are expected to grow 21.9%.

Patrick Industries and Arcosa have a three-five year expected EPS growth rate of 11.3% and 13.1%, respectively.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>

More from Zacks Analyst Blog

You May Like