Aegion Corporation’s AEGN United Special Technical Services, LLC ("USTS") — a joint venture of its subsidiary United Pipeline Systems, Inc. ("United") and Special Technical Services LLC ("STS") of Oman — has secured two contracts from local contractors working for a major oil and gas pipeline operator in Saudi Arabia. The combined value of the contracts stands at nearly $11 million.
Following the news, shares of the company gained 5% on Sep 11. Year to date, the stock has rallied 32.4% compared with the industry’s 35% growth.
Under the contract, USTS will rehabilitate more than 25 miles of 42-inch diameter seawater transport pipelines using United’s Tite Liner system, which is a high-density polyethylene (HDPE) liner. Notably, this will mark the largest pipe diameter in the Middle East since the introduction of Tite Liner system in the region. The project is expected to start in fourth-quarter 2019 and will continue for the next two years.
Meanwhile, Aegion remains committed to the USTS business in Saudi Arabia as it continues to see solid prospects for both its industrial linings and coatings businesses. Moreover, the company remains confident about its onshore and offshore projects over the next several years.
Although the company’s top line had declined over the past few quarters, we believe recent contract wins will drive the company’s revenues in the coming quarters. In the second quarter of 2019, overall revenues declined by 4.9% from the prior year.
Zacks Rank & Other Key Picks
Aegion, which shares its space with Construction Partners, Inc. ROAD, carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the same industry include Frontdoor, inc. FTDR and Quanex Building Products Corporation NX, each sporting a Zacks Rank #1 (Strong Buy). You can the complete list of today’s Zacks #1 Rank stocks here.
Frontdoor has an impressive long-term earnings growth rate of 15.5%.
Quanex posted a trailing four-quarter average beat of 12.5%.
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