Aegion (AEGN) Hits 52-Week Low on Slashed Guidance
Shares of Aegion Corporation (AEGN) hit a 52-week low of $17.32 yesterday and closed at $17.33, with a negative year-to-date return of 20.9%.
What Led to the Drop?
Shares of Aegion plunged 12% on Oct 8, as the company reduced its earnings guidance for 2014 from the prior range of $1.50—$1.65 to $1.27—$1.37. The revised guidance was mainly due to recent events related to project timing.
Bayou’s Louisina facility recently received a notice for the suspension of the entire onshore project thereby cancelling its pipe coating contract, which was earlier planned to begin in the fourth quarter of 2014. This reduced Aegion’s backlog by $34 million.
Fyfe/Fibrwrap expected to secure a sizeable North American industrial pipeline rehabilitation project for execution in the fourth quarter. However, the possible start date has been delayed to the first half of 2015. CRTS recently received an intimation that its interior pipe weld coating work for the offshore 36 inch trunk lines pipe lay operation in Saudi Arabia will stop in the fourth quarter and resume in early 2015.
Moreover, Corrpro is experiencing project mix challenges related to lower margin cathodic protection construction activities for new pipe construction. These can result in higher margin engineering and inspection services in the coming quarters. Also, Unite Pipeline Services has seen delays in work releases in North America.
Aegion announced certain restructuring activities with charges to be recorded in the third and fourth quarters of 2014. This will lead to $15 million to $18 million cash costs and annual pretax savings of $8 million to $11 million or 15 cents to 20 cents per share.
Aegion posted adjusted earnings from continuing operations of 34 cents per share in the second quarter of 2014. Earnings were flat year over year and on the lower end of management’s guidance range of 34 cents to 36 cents. Earnings missed the Zacks Consensus Estimate, with a negative earnings surprise of 0.7%.
Over the past 30 days, Aegion’s estimates have undergone negative revisions for both the current quarter and the year. A Zacks Rank #5 (Strong Sell) further corroborates Aegion’s weakness.
Other Stocks to Consider
Some better-ranked stocks in the sector include Armstrong World Industries, Inc. (AWI), UCP, Inc. (UCP) and Granite Construction Inc. (GVA). All these stocks carry a Zacks Rank #2 (Buy).
Read the Full Research Report on GVA
Read the Full Research Report on AWI
Read the Full Research Report on AEGN
Read the Full Research Report on UCP
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