Shares of Aegion Corp. (NASD:AEGN) gained 4.5% after its unit, Insituform Technologies, LLC, won a contract from the Metropolitan St. Louis Sewer District (MSD), worth around $5.2 million on Jan 15. As per the deal, Insituform will provide rehabilitation with Cured-in-Place Pipe (:CIPP). The stock closed at $22.22 at the end of trading on Jan 17.
Insituform, a global leader in the development and installation of proprietary technologies and services for repairing sewer, water and other underground piping systems, will use its CIPP technology for the rebuilding of over 25 miles of small and medium diameter pipelines throughout the city.
Including this contract, Aegion has secured contracts to the tune of around $22 million from MSD. The project is expected to begin in Jan 2014 and will be complete after 12 months. Aegion is engaging best-in-class project management to ensure consistency in the execution of all the projects.
In addition, North America’s CIPP market grew by around 20% in 2013 largely from a recovery in the U.S. market. In North America, Aegion reported 23% year-over-year revenue growth in the third quarter of 2013 driven by improved backlog and a shift to larger diameter projects.
Aegion will benefit from its strong backlog as of third quarter-end. Furthermore, the company’s contract wins in the past as well as its scope to gain more such deals in the future bode well for the company.
Aegion is taking steps to enhance the sales organization to properly resource and align the organization in its primary end markets, namely pipelines, buildings and transportation. These efforts are expected to lead to improved sales acquisitions and project execution in 2014.
Chesterfield, Missouri-based Aegion is a diversified building and construction company, which provides infrastructure protection, proprietary technologies and facilities. It also offers services related to the reconstruction and improvement of sewer, water, energy and mining piping systems.
Currently, Aegion carries a Zacks Rank #5 (Strong Sell). However, some better-ranked stocks in the sector include United Rentals, Inc. (NYSE:URI), Chicago Bridge & Iron Co. N.V. (NYSE:CBI) and Fluor Corp. (NYSE:FLR). All of these have a Zacks Rank #2 (Buy).