Reviewing Caesarstone (NASDAQ:CSTE) & Argan (NYSE:AGX)

Argan (NYSE:AGX) and Caesarstone (NASDAQ:CSTE) are both construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Institutional and Insider Ownership

79.4% of Argan shares are owned by institutional investors. Comparatively, 33.7% of Caesarstone shares are owned by institutional investors. 6.7% of Argan shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Argan and Caesarstone’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Argan	13.11%	31.38%	13.47%
Caesarstone	-18.44%	-19.35%	-9.18%

Risk & Volatility

Argan has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Caesarstone has a beta of -0.09, meaning that its stock price is 109% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Argan and Caesarstone, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Argan	0	5	3	0	2.38
Caesarstone	1	0	0	0	1.00

Argan presently has a consensus target price of $355.20, suggesting a potential downside of 19.64%. Given Argan’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Argan is more favorable than Caesarstone.

Valuation and Earnings

This table compares Argan and Caesarstone”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Argan	$874.18 million	7.01	$85.46 million	$8.49	52.06
Caesarstone	$443.22 million	0.11	-$42.83 million	($2.03)	-0.72

Argan has higher revenue and earnings than Caesarstone. Caesarstone is trading at a lower price-to-earnings ratio than Argan, indicating that it is currently the more affordable of the two stocks.

Summary

Argan beats Caesarstone on 14 of the 14 factors compared between the two stocks.

About Argan

Argan, Inc., through its subsidiaries, provides engineering, procurement, construction, commissioning, maintenance, project development, and technical consulting services to the power generation market. The company operates through Power Services, Industrial Services, and Telecom Services segments. The Power Services segment offers engineering, procurement, and construction, as well as designing, building, and commissioning of large-scale energy projects to the owners of alternative energy facilities, such as biomass plants, wind farms, and solar fields; and design, construction, project management, start-up, and operation services for projects with approximately 18 gigawatts of power-generating capacity. This segment serves independent power project owners, public utilities, power plant equipment suppliers, and other commercial firms. The Industrial Services segment provides industrial construction and field services and vessel fabrication services for fertilizer, engineering and construction, forest products, and various other industrial companies in southeast region of the United States. The Telecom Services segment offers trenchless directional boring and excavation for underground communication and power networks, as well as aerial cabling services; and installs buried cable, high and low voltage electric lines, and private area outdoor lighting systems. It also provides structured cabling, terminations, and connectivity that offers the physical transport for high-speed data, voice, video, and security networks. This segment serves electricity cooperative, state and local government agencies, counties and municipalities, and technology-oriented government contracting firms, as well as federal government facilities in the mid-Atlantic region of the United States. Argan, Inc. was incorporated in 1961 and is headquartered in Rockville, Maryland.

About Caesarstone

Caesarstone Ltd., together with its subsidiaries, designs, develops, manufactures, and markets engineered stone and other materials under the Caesarstone brand in the United States, Canada, Latin America, Australia, Asia, Europe, the Middle East and Africa, and Israel. The company’s engineered stone slabs are primarily used as indoor and outdoor kitchen countertops in the renovation and remodeling, and residential construction sectors. Its products are also used in other applications, such as vanity tops, wall panels, back splashes, floor tiles, stairs, furniture, and other interior and exterior surfaces that are used in various residential and non-residential applications. The company also offers porcelain products under the Lioli brand for countertops, flooring, and cladding applications; sells natural stone, sinks, and various ancillary fabrication tools and materials; and resells natural stones, as well as various ancillaries, and fabrication and installation accessories, as well as provides fabrication and installation services. It sells its products directly to wholesalers, resellers, and fabricators; and through direct sales force and indirect network of independent distributors. The company was formerly known as Caesarstone Sdot Yam Ltd. and changed its name to Caesarstone Ltd. in June 2016. Caesarstone Ltd. was founded in 1987 and is headquartered in Menashe, Israel.