Intrinsic value of Argan - AGX

Previous Close

$60.55

  Intrinsic Value

$3,433

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+2144%

Previous close

$60.55

 
Intrinsic value

$3,433

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+2144%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AGX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  63.44
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  675
  1,080
  1,669
  2,495
  3,621
  5,108
  7,023
  9,427
  12,378
  15,927
  20,117
  24,981
  30,541
  36,813
  43,800
  51,501
  59,908
  69,009
  78,789
  89,233
  100,324
  112,049
  124,394
  137,351
  150,914
  165,081
  179,853
  195,237
  211,243
  227,885
  245,183
Variable operating expenses, $m
 
  885
  1,365
  2,039
  2,957
  4,171
  5,733
  7,694
  10,101
  12,997
  16,415
  20,380
  24,916
  30,032
  35,733
  42,015
  48,874
  56,298
  64,277
  72,797
  81,846
  91,411
  101,483
  112,053
  123,118
  134,675
  146,727
  159,277
  172,335
  185,912
  200,024
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  563
  885
  1,365
  2,039
  2,957
  4,171
  5,733
  7,694
  10,101
  12,997
  16,415
  20,380
  24,916
  30,032
  35,733
  42,015
  48,874
  56,298
  64,277
  72,797
  81,846
  91,411
  101,483
  112,053
  123,118
  134,675
  146,727
  159,277
  172,335
  185,912
  200,024
Operating income, $m
  112
  195
  304
  456
  663
  937
  1,290
  1,733
  2,276
  2,930
  3,702
  4,601
  5,625
  6,780
  8,067
  9,486
  11,034
  12,710
  14,512
  16,435
  18,478
  20,638
  22,912
  25,298
  27,796
  30,405
  33,126
  35,960
  38,908
  41,973
  45,159
EBITDA, $m
  115
  201
  310
  464
  673
  949
  1,305
  1,752
  2,300
  2,959
  3,738
  4,642
  5,675
  6,840
  8,139
  9,570
  11,132
  12,823
  14,640
  16,581
  18,642
  20,821
  23,115
  25,522
  28,042
  30,675
  33,420
  36,278
  39,252
  42,345
  45,559
Interest expense (income), $m
  0
  0
  5
  15
  29
  47
  72
  103
  142
  191
  249
  318
  398
  489
  592
  707
  833
  972
  1,121
  1,282
  1,453
  1,635
  1,828
  2,031
  2,243
  2,466
  2,699
  2,941
  3,194
  3,457
  3,730
Earnings before tax, $m
  115
  195
  298
  441
  635
  890
  1,218
  1,630
  2,134
  2,739
  3,453
  4,283
  5,227
  6,291
  7,475
  8,779
  10,201
  11,739
  13,391
  15,154
  17,025
  19,002
  21,084
  23,267
  25,553
  27,939
  30,427
  33,018
  35,714
  38,516
  41,429
Tax expense, $m
  38
  53
  81
  119
  171
  240
  329
  440
  576
  740
  932
  1,156
  1,411
  1,699
  2,018
  2,370
  2,754
  3,169
  3,615
  4,091
  4,597
  5,131
  5,693
  6,282
  6,899
  7,544
  8,215
  8,915
  9,643
  10,399
  11,186
Net income, $m
  70
  143
  218
  322
  463
  650
  889
  1,190
  1,558
  2,000
  2,520
  3,127
  3,816
  4,592
  5,457
  6,408
  7,446
  8,569
  9,775
  11,062
  12,428
  13,872
  15,391
  16,985
  18,653
  20,396
  22,212
  24,103
  26,071
  28,117
  30,243

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  523
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  644
  563
  870
  1,301
  1,888
  2,663
  3,661
  4,915
  6,453
  8,304
  10,489
  13,024
  15,924
  19,193
  22,836
  26,851
  31,235
  35,980
  41,079
  46,524
  52,307
  58,419
  64,856
  71,612
  78,683
  86,069
  93,771
  101,792
  110,137
  118,814
  127,833
Adjusted assets (=assets-cash), $m
  121
  563
  870
  1,301
  1,888
  2,663
  3,661
  4,915
  6,453
  8,304
  10,489
  13,024
  15,924
  19,193
  22,836
  26,851
  31,235
  35,980
  41,079
  46,524
  52,307
  58,419
  64,856
  71,612
  78,683
  86,069
  93,771
  101,792
  110,137
  118,814
  127,833
Revenue / Adjusted assets
  5.579
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
Average production assets, $m
  21
  33
  52
  77
  112
  158
  218
  292
  384
  494
  624
  774
  947
  1,141
  1,358
  1,597
  1,857
  2,139
  2,442
  2,766
  3,110
  3,474
  3,856
  4,258
  4,678
  5,118
  5,575
  6,052
  6,549
  7,064
  7,601
Working capital, $m
  237
  -108
  -167
  -250
  -362
  -511
  -702
  -943
  -1,238
  -1,593
  -2,012
  -2,498
  -3,054
  -3,681
  -4,380
  -5,150
  -5,991
  -6,901
  -7,879
  -8,923
  -10,032
  -11,205
  -12,439
  -13,735
  -15,091
  -16,508
  -17,985
  -19,524
  -21,124
  -22,789
  -24,518
Total debt, $m
  0
  155
  431
  819
  1,347
  2,045
  2,943
  4,071
  5,456
  7,122
  9,088
  11,370
  13,979
  16,922
  20,201
  23,814
  27,759
  32,030
  36,619
  41,519
  46,724
  52,226
  58,019
  64,099
  70,463
  77,110
  84,042
  91,261
  98,771
  106,581
  114,697
Total liabilities, $m
  353
  507
  783
  1,171
  1,699
  2,397
  3,295
  4,423
  5,808
  7,474
  9,440
  11,722
  14,331
  17,274
  20,553
  24,166
  28,111
  32,382
  36,971
  41,871
  47,076
  52,578
  58,371
  64,451
  70,815
  77,462
  84,394
  91,613
  99,123
  106,933
  115,049
Total equity, $m
  292
  56
  87
  130
  189
  266
  366
  491
  645
  830
  1,049
  1,302
  1,592
  1,919
  2,284
  2,685
  3,123
  3,598
  4,108
  4,652
  5,231
  5,842
  6,486
  7,161
  7,868
  8,607
  9,377
  10,179
  11,014
  11,881
  12,783
Total liabilities and equity, $m
  645
  563
  870
  1,301
  1,888
  2,663
  3,661
  4,914
  6,453
  8,304
  10,489
  13,024
  15,923
  19,193
  22,837
  26,851
  31,234
  35,980
  41,079
  46,523
  52,307
  58,420
  64,857
  71,612
  78,683
  86,069
  93,771
  101,792
  110,137
  118,814
  127,832
Debt-to-equity ratio
  0.000
  2.750
  4.950
  6.290
  7.140
  7.680
  8.040
  8.280
  8.450
  8.580
  8.660
  8.730
  8.780
  8.820
  8.850
  8.870
  8.890
  8.900
  8.910
  8.920
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
Adjusted equity ratio
  -1.909
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  70
  143
  218
  322
  463
  650
  889
  1,190
  1,558
  2,000
  2,520
  3,127
  3,816
  4,592
  5,457
  6,408
  7,446
  8,569
  9,775
  11,062
  12,428
  13,872
  15,391
  16,985
  18,653
  20,396
  22,212
  24,103
  26,071
  28,117
  30,243
Depreciation, amort., depletion, $m
  3
  5
  6
  8
  9
  12
  15
  19
  24
  29
  36
  41
  50
  60
  71
  84
  98
  113
  129
  146
  164
  183
  203
  224
  246
  269
  293
  319
  345
  372
  400
Funds from operations, $m
  431
  148
  224
  330
  473
  662
  904
  1,209
  1,581
  2,029
  2,557
  3,167
  3,866
  4,653
  5,528
  6,492
  7,544
  8,682
  9,904
  11,208
  12,592
  14,055
  15,594
  17,209
  18,900
  20,665
  22,505
  24,422
  26,416
  28,489
  30,643
Change in working capital, $m
  172
  -41
  -59
  -83
  -113
  -149
  -191
  -240
  -295
  -355
  -419
  -486
  -556
  -627
  -699
  -770
  -841
  -910
  -978
  -1,044
  -1,109
  -1,172
  -1,235
  -1,296
  -1,356
  -1,417
  -1,477
  -1,538
  -1,601
  -1,664
  -1,730
Cash from operations, $m
  259
  188
  283
  412
  585
  810
  1,096
  1,449
  1,876
  2,384
  2,976
  3,654
  4,422
  5,280
  6,227
  7,263
  8,385
  9,592
  10,882
  12,252
  13,701
  15,227
  16,829
  18,505
  20,256
  22,082
  23,983
  25,960
  28,016
  30,153
  32,373
Maintenance CAPEX, $m
  0
  -1
  -2
  -3
  -4
  -6
  -8
  -11
  -15
  -20
  -26
  -33
  -41
  -50
  -60
  -71
  -84
  -98
  -113
  -129
  -146
  -164
  -183
  -203
  -224
  -246
  -269
  -293
  -319
  -345
  -372
New CAPEX, $m
  -3
  -12
  -18
  -26
  -35
  -46
  -59
  -75
  -91
  -110
  -130
  -151
  -172
  -194
  -217
  -239
  -261
  -282
  -303
  -324
  -344
  -363
  -383
  -402
  -420
  -439
  -458
  -477
  -496
  -516
  -536
Cash from investing activities, $m
  -244
  -13
  -20
  -29
  -39
  -52
  -67
  -86
  -106
  -130
  -156
  -184
  -213
  -244
  -277
  -310
  -345
  -380
  -416
  -453
  -490
  -527
  -566
  -605
  -644
  -685
  -727
  -770
  -815
  -861
  -908
Free cash flow, $m
  15
  175
  263
  384
  546
  758
  1,028
  1,363
  1,770
  2,254
  2,820
  3,470
  4,209
  5,035
  5,950
  6,952
  8,040
  9,212
  10,466
  11,800
  13,212
  14,700
  16,263
  17,900
  19,611
  21,396
  23,255
  25,190
  27,202
  29,292
  31,465
Issuance/(repayment) of debt, $m
  0
  155
  276
  388
  528
  698
  898
  1,128
  1,385
  1,665
  1,966
  2,282
  2,609
  2,943
  3,279
  3,614
  3,945
  4,271
  4,589
  4,901
  5,204
  5,502
  5,793
  6,080
  6,364
  6,647
  6,932
  7,219
  7,511
  7,809
  8,117
Issuance/(repurchase) of shares, $m
  16
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  6
  155
  276
  388
  528
  698
  898
  1,128
  1,385
  1,665
  1,966
  2,282
  2,609
  2,943
  3,279
  3,614
  3,945
  4,271
  4,589
  4,901
  5,204
  5,502
  5,793
  6,080
  6,364
  6,647
  6,932
  7,219
  7,511
  7,809
  8,117
Total cash flow (excl. dividends), $m
  21
  330
  539
  772
  1,074
  1,456
  1,926
  2,491
  3,154
  3,919
  4,786
  5,752
  6,818
  7,978
  9,229
  10,566
  11,985
  13,483
  15,055
  16,700
  18,416
  20,201
  22,056
  23,980
  25,976
  28,044
  30,187
  32,409
  34,712
  37,102
  39,582
Retained Cash Flow (-), $m
  -73
  -56
  -31
  -43
  -59
  -78
  -100
  -125
  -154
  -185
  -218
  -254
  -290
  -327
  -364
  -402
  -438
  -475
  -510
  -545
  -578
  -611
  -644
  -676
  -707
  -739
  -770
  -802
  -835
  -868
  -902
Prev. year cash balance distribution, $m
 
  292
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  565
  508
  729
  1,016
  1,379
  1,827
  2,366
  3,000
  3,734
  4,567
  5,499
  6,528
  7,651
  8,865
  10,164
  11,547
  13,008
  14,545
  16,156
  17,838
  19,590
  21,412
  23,305
  25,269
  27,305
  29,417
  31,607
  33,878
  36,234
  38,680
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  542
  465
  634
  836
  1,069
  1,326
  1,598
  1,875
  2,145
  2,395
  2,611
  2,786
  2,909
  2,976
  2,984
  2,934
  2,830
  2,679
  2,488
  2,267
  2,026
  1,777
  1,527
  1,287
  1,062
  858
  678
  524
  396
  291
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Argan, Inc., through its subsidiaries, provides engineering, procurement, construction, commissioning, operations management, maintenance, development, and consulting services to the power generation and renewable energy markets. It operates through Power Industry Services, Industrial Fabrication and Field Services, and Telecommunications Infrastructure Services segments. The Power Industry Services segment offers engineering, procurement, and construction contracting services to the owners of alternative energy facilities, including biomass plants, wind farms, and solar fields; and design, construction, start-up, and operation services for approximately 76 facilities with approximately 14,000 megawatts of power-generating capacity. This segment serves independent power project owners, public utilities, municipalities, public institutions, and private industry. The Industrial Fabrication and Field Services segment provides industrial fabrication and construction services to light and heavy industrial organizations that include pulp and paper, petrochemical, and power companies in the southern United States. The Telecommunications Infrastructure Services segment engages in the outside plant cabling services, such as trench-less directional boring and excavation for underground communication and power networks; aerial cabling services; and the installation of buried cable, high and low voltage electric lines, and private area outdoor lighting systems. This segment also offers inside premises wiring services, which include structuring, cabling, terminations, and connectivity that provide the physical transport for high speed data, voice, video, and security networks. It serves state and local government agencies, regional communications service providers, electric utilities, other commercial customers, and federal government facilities, including cleared facilities in the mid-Atlantic region. The company was founded in 1961 and is headquartered in Rockville, Maryland.

FINANCIAL RATIOS  of  Argan (AGX)

Valuation Ratios
P/E Ratio 13.4
Price to Sales 1.4
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 3.6
Price to Free Cash Flow 3.7
Growth Rates
Sales Growth Rate 63.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 13.3%
Ret/ On Assets - 3 Yr. Avg. 10.2%
Return On Total Capital 27.4%
Ret/ On T. Cap. - 3 Yr. Avg. 20.9%
Return On Equity 27.4%
Return On Equity - 3 Yr. Avg. 20.9%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 21.8%
Gross Margin - 3 Yr. Avg. 22.6%
EBITDA Margin 17.5%
EBITDA Margin - 3 Yr. Avg. 17.8%
Operating Margin 16.6%
Oper. Margin - 3 Yr. Avg. 17.1%
Pre-Tax Margin 17%
Pre-Tax Margin - 3 Yr. Avg. 17.4%
Net Profit Margin 10.4%
Net Profit Margin - 3 Yr. Avg. 9%
Effective Tax Rate 33%
Eff/ Tax Rate - 3 Yr. Avg. 33.4%
Payout Ratio 21.4%

AGX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGX stock intrinsic value calculation we used $675 million for the last fiscal year's total revenue generated by Argan. The default revenue input number comes from 2017 income statement of Argan. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AGX stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AGX is calculated based on our internal credit rating of Argan, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Argan.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AGX stock the variable cost ratio is equal to 82.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AGX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Argan.

Corporate tax rate of 27% is the nominal tax rate for Argan. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AGX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AGX are equal to 3.1%.

Life of production assets of 19 years is the average useful life of capital assets used in Argan operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AGX is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $292 million for Argan - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 14.972 million for Argan is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Argan at the current share price and the inputted number of shares is $0.9 billion.

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COMPANY NEWS

▶ Argan, Inc. Value Analysis (NYSE:AGX) : August 1, 2017   [Aug-01-17 05:41PM  Capital Cube]
▶ ETFs with exposure to Argan, Inc. : July 10, 2017   [Jul-10-17 01:52PM  Capital Cube]
▶ ETFs with exposure to Argan, Inc. : June 27, 2017   [Jun-27-17 02:49PM  Capital Cube]
▶ Argan and Sturm Ruger Show High Profit and Low Debt   [Jun-20-17 06:06PM  GuruFocus.com]
▶ ETFs with exposure to Argan, Inc. : June 16, 2017   [Jun-16-17 03:19PM  Capital Cube]
▶ Argan posts 1Q profit   [Jun-07-17 04:31PM  Associated Press]
▶ Argan, Inc. Reports First Quarter Results   [04:15PM  Business Wire]
▶ ETFs with exposure to Argan, Inc. : June 6, 2017   [Jun-06-17 11:36AM  Capital Cube]
▶ ETFs with exposure to Argan, Inc. : May 23, 2017   [May-23-17 12:24PM  Capital Cube]
▶ ETFs with exposure to Argan, Inc. : May 1, 2017   [May-01-17 03:33PM  Capital Cube]
▶ ETFs with exposure to Argan, Inc. : April 17, 2017   [Apr-17-17 12:45PM  Capital Cube]
▶ Argan posts 4Q profit   [Apr-10-17 04:22PM  Associated Press]
▶ 3 Growth Stocks That Could Soar More Than Nvidia   [Mar-01-17 11:10AM  Motley Fool]
▶ Top Ranked Value Stocks to Buy for January 19th   [Jan-19-17 10:03AM  Zacks]
▶ Gemma Power Systems Celebrates 20th Anniversary   [Jan-18-17 10:25AM  Business Wire]
▶ Is 51job, Inc. (ADR) (JOBS) A Good Stock To Buy?   [Dec-16-16 01:59PM  at Insider Monkey]
▶ Argan, Inc. Reports Third Quarter Results   [04:05PM  Business Wire]
Stock chart of AGX Financial statements of AGX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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