Armstrong World Industries (NYSE:AWI) and Argan (NYSE:AGX) Head to Head Analysis

Argan (NYSE:AGX) and Armstrong World Industries (NYSE:AWI) are both mid-cap construction companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Institutional & Insider Ownership

79.4% of Argan shares are owned by institutional investors. Comparatively, 98.9% of Armstrong World Industries shares are owned by institutional investors. 3.0% of Argan shares are owned by insiders. Comparatively, 1.2% of Armstrong World Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Argan and Armstrong World Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Argan	15.48%	36.89%	14.64%
Armstrong World Industries	18.59%	36.71%	16.86%

Earnings and Valuation

This table compares Argan and Armstrong World Industries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Argan	$944.61 million	8.41	$137.77 million	$11.38	49.77
Armstrong World Industries	$1.62 billion	4.23	$308.70 million	$7.05	22.80

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

Dividends

Argan pays an annual dividend of $2.00 per share and has a dividend yield of 0.4%. Armstrong World Industries pays an annual dividend of $1.36 per share and has a dividend yield of 0.8%. Argan pays out 17.6% of its earnings in the form of a dividend. Armstrong World Industries pays out 19.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Argan has increased its dividend for 2 consecutive years and Armstrong World Industries has increased its dividend for 1 consecutive years.

Volatility & Risk

Argan has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500. Comparatively, Armstrong World Industries has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Argan and Armstrong World Industries, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Argan	0	3	4	1	2.75
Armstrong World Industries	0	4	5	1	2.70

Argan presently has a consensus target price of $470.40, indicating a potential downside of 16.95%. Armstrong World Industries has a consensus target price of $211.86, indicating a potential upside of 31.80%. Given Armstrong World Industries’ higher probable upside, analysts clearly believe Armstrong World Industries is more favorable than Argan.

Summary

Armstrong World Industries beats Argan on 9 of the 17 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 Armstrong World Industries

Armstrong World Industries, Inc., together with its subsidiaries, engages in the design, manufacture, and sale of ceiling and wall solutions in the Americas. It operates through Mineral Fiber and Architectural Specialties segments. The company offers mineral fiber, fiberglass wool, metal, wood, felt, wood fiber, and glass-reinforced-gypsum; ceiling component products, such as ceiling perimeters and trims, as well as grid products that support drywall ceiling systems; ceilings, walls, and facades for use in commercial settings; and manufactures ceiling suspension system (grid) products. It serves commercial and residential construction markets, as well as renovation of existing buildings sectors. The company sells its products to resale distributors, ceiling system contractors, wholesalers, and retailers comprising large home centers. Armstrong World Industries, Inc. was founded in 1860 and is headquartered in Lancaster, Pennsylvania.