A month has gone by since the last earnings report for Aegion Corp. . Shares have lost about 11.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Aegion Q4 Earnings Beat on Estimates, Revenues Lag
Aegion reported fourth-quarter 2016 adjusted earnings of $0.44 per share, which increased around 22% year over year. Earnings comfortably beat the Zacks Consensus Estimate of $0.34. Including one-time items, Aegion reported profit of $0.52 per share in the quarter compared to a loss of $0.91 recorded in the prior-year quarter.
Operational Update
Total revenue of $321.8 million in the quarter declined 2.7% year over year. In addition, revenues fell short of the Zacks Consensus Estimate of $337 million.
Adjusted cost of sales decreased 13% to $250 million from $263 million in the year-ago quarter. Adjusted gross profit increased 5.8% to $71.4 million from $67.5 million in the prior-year quarter. Adjusted gross margin expanded 180 basis points (bps) year over year to 22.2%.
Adjusted operating expenses climbed 8.3% year over year to $49.5 million. Adjusted operating income was $21.9 million, up 0.5% year over year. Operating margin in the quarter came in at 6.8%, expanding 20 bps from the year-ago quarter.
Segmental Performance
Revenues from the Infrastructure Solutions segment inched up 1.4% year over year to $137 million. The segment’s adjusted operating income plummeted 31.9% year over year to $10.4 million.
The Corrosion Protection segment’s revenues rose 9.9% to $119.5 million from $108.8 million in the comparable quarter last year. The segment reported an adjusted operating profit of $10 million, a whopping 268.7% surge from $2.7 million in the year-ago quarter.
Revenues in the Energy Services segment plunged 25% year over year to $65 million. The segment reported an adjusted operating profit of $1.4 million compared with $3.8 million in the prior-year quarter.
Financial Update
Aegion had cash and cash equivalents of $129.5 million as of Dec 31, 2016 compared with $209 million at the end of 2015. The company recorded cash flow from operations of $73.2 million as of Dec 31, 2016 compared with $132 million as of Dec 31, 2015.
Aegion’s consolidated backlog came in at $689.6 million as of Dec 31, 2016, down 11% year over year.
2016 Performance
Aegion posted earnings of $1.10 per share for 2016, down 14% year over year. Earnings beat the Zacks Consensus Estimate of $1.00. Revenues for full-year 2016 dipped 8.4% year over year at $1.22 billion. Revenues also missed the Zacks Consensus Estimate of $1.24 billion.
Outlook
For 2017, Aegion expects higher revenues and operating income across all three platforms to result in solid earnings per share growth, greater cash generation and increasing ROIC. This positive outlook reflects its assessment of growing end markets, including an improving environment for oil & gas infrastructure, the anticipated completion of the large deepwater pipe coating and insulation project, and consistent execution of long-term growth strategy.
Aegion projects 2017 revenue growth for Infrastructure Solutions to exceed the low- to mid-single digit three-year target at modestly lower operating margins compared to the 9.8% adjusted operating margin achieved in 2016.
The company guided Corrosion Protection’s revenue growth of mid-teens and mid-single digit operating margins led by the planned contribution from the deepwater pipe coating and insulation project, and anticipated modest recovery in the energy markets. Further, the company anticipates Energy Services’ revenues to grow in mid-single digits, in line with the three-year growth target, with operating margins above the fourth-quarter 2016 levels.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one upward revision for the current quarter.
VGM Scores
At this time, Aegion's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of this revision also looks promising. Notably, the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.
Image: Bigstock
Why Is Aegion (AEGN) Down 11.4% Since the Last Earnings Report?
A month has gone by since the last earnings report for Aegion Corp. . Shares have lost about 11.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Aegion Q4 Earnings Beat on Estimates, Revenues Lag
Aegion reported fourth-quarter 2016 adjusted earnings of $0.44 per share, which increased around 22% year over year. Earnings comfortably beat the Zacks Consensus Estimate of $0.34. Including one-time items, Aegion reported profit of $0.52 per share in the quarter compared to a loss of $0.91 recorded in the prior-year quarter.
Operational Update
Total revenue of $321.8 million in the quarter declined 2.7% year over year. In addition, revenues fell short of the Zacks Consensus Estimate of $337 million.
Adjusted cost of sales decreased 13% to $250 million from $263 million in the year-ago quarter. Adjusted gross profit increased 5.8% to $71.4 million from $67.5 million in the prior-year quarter. Adjusted gross margin expanded 180 basis points (bps) year over year to 22.2%.
Adjusted operating expenses climbed 8.3% year over year to $49.5 million. Adjusted operating income was $21.9 million, up 0.5% year over year. Operating margin in the quarter came in at 6.8%, expanding 20 bps from the year-ago quarter.
Segmental Performance
Revenues from the Infrastructure Solutions segment inched up 1.4% year over year to $137 million. The segment’s adjusted operating income plummeted 31.9% year over year to $10.4 million.
The Corrosion Protection segment’s revenues rose 9.9% to $119.5 million from $108.8 million in the comparable quarter last year. The segment reported an adjusted operating profit of $10 million, a whopping 268.7% surge from $2.7 million in the year-ago quarter.
Revenues in the Energy Services segment plunged 25% year over year to $65 million. The segment reported an adjusted operating profit of $1.4 million compared with $3.8 million in the prior-year quarter.
Financial Update
Aegion had cash and cash equivalents of $129.5 million as of Dec 31, 2016 compared with $209 million at the end of 2015. The company recorded cash flow from operations of $73.2 million as of Dec 31, 2016 compared with $132 million as of Dec 31, 2015.
Aegion’s consolidated backlog came in at $689.6 million as of Dec 31, 2016, down 11% year over year.
2016 Performance
Aegion posted earnings of $1.10 per share for 2016, down 14% year over year. Earnings beat the Zacks Consensus Estimate of $1.00. Revenues for full-year 2016 dipped 8.4% year over year at $1.22 billion. Revenues also missed the Zacks Consensus Estimate of $1.24 billion.
Outlook
For 2017, Aegion expects higher revenues and operating income across all three platforms to result in solid earnings per share growth, greater cash generation and increasing ROIC. This positive outlook reflects its assessment of growing end markets, including an improving environment for oil & gas infrastructure, the anticipated completion of the large deepwater pipe coating and insulation project, and consistent execution of long-term growth strategy.
Aegion projects 2017 revenue growth for Infrastructure Solutions to exceed the low- to mid-single digit three-year target at modestly lower operating margins compared to the 9.8% adjusted operating margin achieved in 2016.
The company guided Corrosion Protection’s revenue growth of mid-teens and mid-single digit operating margins led by the planned contribution from the deepwater pipe coating and insulation project, and anticipated modest recovery in the energy markets. Further, the company anticipates Energy Services’ revenues to grow in mid-single digits, in line with the three-year growth target, with operating margins above the fourth-quarter 2016 levels.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one upward revision for the current quarter.
Aegion Corp Price and Consensus
Aegion Corp Price and Consensus | Aegion Corp Quote
VGM Scores
At this time, Aegion's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of this revision also looks promising. Notably, the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.