Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Construction & Engineering industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Construction & Engineering Stock News

Before choosing which top Construction & Engineering stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The Heavy and Civil Engineering Construction subsector comprises establishments whose primary activity is the construction of entire engineering projects, such as highways and dams, and specialty trade contractors, whose primary activity is the production of a specific component for such projects. Specialty trade contractors in the Heavy and Civil Engineering Construction subsector generally are performing activities that are specific to heavy and civil engineering construction projects and are not normally performed on buildings. The work performed may include new work, additions, alterations, or maintenance and repairs. Specialty trade activities are classified in this subsector if the skills and equipment present are specific to heavy or civil engineering construction projects. For example, specialized equipment is needed to paint lines on highways. This equipment is not normally used in building applications so the activity is classified in this subsector. Construction projects involving water resources, including dredging and land drainage, and projects involving open space improvement of parks and trails are included in this subsector. Some establishments in this subsector focus on the subdivision of land into individual building lots usually perform various additional site-improvement activities, like road building and utility line installation. Establishments in this subsector are classified based on the types of structures that they construct. This classification reflects variations in the requirements of the underlying production processes.

Why Focus on Undervalued Construction & Engineering Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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4 Undervalued Construction & Engineering Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Construction & Engineering industry for Wednesday, September 06, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Construction & Engineering industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Argan, Inc.’s Value Grade

Value Grade:

Argan, Inc. (Argan) is a holding company. It conducts operations through its wholly owned subsidiaries, Gemma Power Systems, LLC and affiliates (GPS), Atlantic Projects Company Limited and affiliates (APC), The Roberts Company, Inc. (TRC) and Southern Maryland Cable, Inc. (SMC). Through GPS and APC, its power industry services segment provides a full range of engineering, procurement, construction, commissioning, maintenance, project development and technical consulting services to the power generation market, including the renewable energy sector. Through TRC, the industrial fabrication and field services segment provides on-site services that support new plant construction and additions, maintenance turnarounds, shutdowns and emergency mobilizations for industrial plants. Through SMC, its telecommunications infrastructure services segment provides project management, construction, installation and maintenance services to commercial, local government and federal government customers.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Argan, Inc. has a Value Score of 63, which is considered to be undervalued.

When you look at Argan, Inc.’s price-to-sales ratio at 1.20 compared to the industry median at 0.89, this company has a higher price relative to revenue compared to its peers. This could make Argan, Inc.’s stock less attractive for value investors.

Argan, Inc.’s price-earnings ratio is 20.37 compared to the industry median at 20.37. This means it has a similar share price relative to earnings compared to its peers. This could make Argan, Inc. fairly attractive for value investors.

Now, let’s assess Argan, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 8.7, when compared to the industry median of 10.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Argan, Inc.’s shareholder yield is higher than its industry median ratio of (0.14%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Argan, Inc.’s price-to-book ratio is lower than its industry median ratio of 2.58. This could make Argan, Inc. more attractive to investors looking for a new addition to their portfolio.

AMREP Corporation’s Value Grade

Value Grade:

AMREP Corporation is a holding company, which conducts business through its subsidiaries. The Company operates through two business segments: land development and homebuilding. The land development segment offers for sale both developed and undeveloped real property to national, regional and local homebuilders, commercial and industrial property developers, and others. The Company owns approximately 17,000 acres in Sandoval County, New Mexico. The Company develops both residential lots and sites for commercial and industrial use as demand warrants. The homebuilding segment offers a variety of home floor plans and elevations at different prices and with varying levels of options and amenities to meet the needs of homebuyers. The Company is focused on selling single-family detached and attached homes. The Company commenced operations in New Mexico of its internal homebuilder, Amreston Homes. The Company utilizes internal and external sales brokers for home sales.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

AMREP Corporation has a Value Score of 93, which is considered to be undervalued.

AMREP Corporation’s price-earnings ratio is 3.9 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes AMREP Corporation more attractive for value investors.

AMREP Corporation’s price-to-book ratio is higher than its peers. This could make AMREP Corporation less attractive for value investors when compared to the industry median at 2.58.

You can read more about AMREP Corporation’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Kaanapali Land LLC’s Value Grade

Value Grade:

Kaanapali Land, LLC operates through two segments: Property and Agriculture. The Property segment primarily develops land for sale and negotiates bulk sales of undeveloped land. The Company?s Agriculture segment is engaged in farming, harvesting and milling operations relating to coffee orchards on behalf of the applicable landowners. It also cultivates, harvests and sells bananas and citrus fruits and engages in certain ranching operations. The Property and Agriculture segments operate in the State of Hawaii. Its developable lands are located on the west side of the Island of Maui in the State of Hawaii. The majority of the developable lands are located near to the Kaanapali resort area. Its agricultural operations consist primarily of cultivation, milling and sale of coffee. It also maintains and operates a system of irrigation infrastructure including development tunnels, ditches, tunnels, siphons, flumes and reservoirs required to irrigate its agricultural operations.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Kaanapali Land LLC has a Value Score of 65, which is considered to be undervalued.

Kaanapali Land LLC’s price-earnings ratio is 9.0 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Kaanapali Land LLC more attractive for value investors.

Kaanapali Land LLC’s price-to-book ratio is higher than its peers. This could make Kaanapali Land LLC less attractive for value investors when compared to the industry median at 2.58.

You can read more about Kaanapali Land LLC’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Matrix Service Co’s Value Grade

Value Grade:

Matrix Service Company, through its subsidiaries, is an industrial engineering and construction contractor operating in North America. The Company operates through three segments: Utility and Power Infrastructure, Process and Industrial Facilities, and Storage and Terminal Solutions. The Utility and Power Infrastructure consists of power delivery services provided to investor-owned utilities, including the construction of new substations, upgrades of existing substations, transmission and distribution line installations, upgrades and maintenance, as well as emergency and storm restoration services. The Process and Industrial Facilities serve customers in the downstream and midstream petroleum industries who are engaged in refining crude oil and processing, fractionating, and marketing natural gas and natural gas liquids. The Storage and Terminal Solutions consist of work related to aboveground storage tanks and terminals. It also includes work related to cryogenic.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Matrix Service Co has a Value Score of 72, which is considered to be undervalued.

Matrix Service Co’s price-to-book ratio is higher than its peers. This could make Matrix Service Co less attractive for value investors when compared to the industry median at 2.58.

You can read more about Matrix Service Co’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Construction & Engineering Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Construction & Engineering stocks as well as other industrys.

Choosing Which of the 4 Best Construction & Engineering Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Argan, Inc. stock has a Value Grade of B.
• AMREP Corporation stock has a Value Grade of A.
• Kaanapali Land LLC stock has a Value Grade of B.
• Matrix Service Co stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 undervalued stocks in the Construction & Engineering industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Construction & Engineering Stocks

Want to learn more about Construction & Engineering stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 4 Undervalued Construction & Engineering Stocks for Wednesday, September 06
• Why Arcosa Inc’s (ACA) Stock Is Down 6.22%
• Why Construction Partners Inc’s (ROAD) Stock Is Down 4.53%
• Why Forestar Group Inc’s (FOR) Stock Is Down 6.32%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.