Aegion's Unit to Rehabilitate St. Louis' Wastewater Pipelines
Aegion Corporation’s AEGN subsidiary, Insituform Technologies, LLC (“Insituform”) has received a $5.1-million contract from the Metropolitan St. Louis Sewer District. Per the contract, the company will rehabilitate more than 18 miles of six to 96 inch wastewater pipelines using Insituform cured-in-place pipe (“CIPP”).
The project is likely to begin in August 2019 and will be completed within two years. Since 1971, Aegion has maintained its market leadership position in the remediation of wastewater pipelines in North America using CIPP technology.
Robust Insituform CIPP Technology to Aid Top Line
The Insituform CIPP is a trenchless, jointless and seamless pipe-within-a-pipe solution used to rehabilitate pipes in numerous diameters. Notably, the Insituform CIPP is the first trenchless technology for renovating wastewater pipelines without making extreme expense and disruption, replacing the conventional “dig-and-replace” methods.
The company’s CIPP technology within the Infrastructure Solutions business is the largest contributor to top-line growth. Notably, the said business, which accounted for 47.5% of first-quarter 2019 revenues, offers a diverse portfolio of solutions in a highly fragmented and growing market.
Notably, the segment’s first-quarter revenues (excluding the impact of exited or to-be-exited businesses) inched up 2%, driven by solid growth in the North America CIPP business, and a fewer impacts of manpower and equipment challenges compared with the prior-year period.
Also, adjusted gross and operating margins increased impressively by 370 and 450 basis points, respectively, during the quarter. Owing to continuous cost-cutting and restructuring initiatives taken up by the company, adjusted operating expenses declined 8% from the prior-year quarter.
However, due to reduction in large coating project contributions at Corrosion Protection and turnaround activity at Energy Services, Aegion’s overall performance slumped during the first quarter. Aegion’s shares have gained 1.9% so far this year compared with its industry’s growth of 23.7%.
Although the company’s shares have underperformed the industry in the said period, strong backlog position, improving market outlook in core businesses and robust Insituform CIPP process raise hopes.
On Apr 25, 2019, it received three contracts from the City of Montreal, Quebec, Canada to rehabilitate more than 17 miles of small, medium and large-diameter wastewater pipelines in both residential and commercial areas. The combined value to these contracts was approximately $13 million.
These contract wins are expected to help the company overcome the above-mentioned headwinds in the upcoming quarters. Notably, earnings estimates for the current and next quarter have moved up 5.9% and 2.6%, respectively, over the past seven days, raising analysts’ optimism surrounding the company’s earnings growth potential.
Zacks Rank & Key Picks
Aegion currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include TopBuild Corp. BLD, Arcosa, Inc. ACA and Construction Partners, Inc. ROAD, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TopBuild, Arcosa and Construction Partners have a three-five year earnings growth rate of 28%, 12.6%, and 10%, respectively.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>
Click to get this free report
TopBuild Corp. (BLD): Free Stock Analysis Report
Aegion Corporation (AEGN): Free Stock Analysis Report
Construction Partners, Inc. (ROAD): Free Stock Analysis Report
Arcosa, Inc. (ACA): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.