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Aegion to Restore Wastewater Pipelines in Baltimore County

Zacks Equity Research

Aegion Corporation AEGN is set to rehabilitate another site in Baltimore County, MD. Aegion’s subsidiary — Insituform Technologies, LLC or Insituform — has inked a $6.9-million deal to renovate approximately 23,000 feet of 30- to 60-inch wastewater pipelines.

The latest contract — which is expected to start in November — will cover residential and commercial areas throughout Baltimore County, as well as the Martin State Airport locality. The contract work is expected to be completed within two years.

Solid Project Execution Bodes Well

Since 2011, the company’s Infrastructure Solutions business has completed several large projects valued at approximately $17 million within the city. The business — which accounted for 48.8% of second-quarter 2019 revenues — is the largest contributor to top-line growth and remains committed to maintain its market leadership position in the rehabilitation of pipelines.

Notably, the company’s second-quarter 2019 adjusted earnings grew 9% year over year, despite a 4.9% decrease in consolidated revenues. The upside mainly stemmed from strong Infrastructure Solutions business, and significant top and bottom-line growth from Energy Services.

For 2019, this market leader in the rehabilitation of wastewater pipelines in North America expects a modest improvement in adjusted EPS on the back of strong backlog position and market outlook for core businesses. Particularly in the Infrastructure Solutions business, it predicts revenue growth to be 2-4% after adjusting for the effect of exited or to-be-exited operations, supported by estimated improvements in crew productivity and project mix within North America CIPP.

Notably, Aegion’s shares have gained 24.8% in the past six months compared with its industry’s growth of 12%. Estimates for 2019 have moved north over the past 60 days, reflecting analysts’ optimism surrounding the company’s prospects.

Zacks Rank & Other Key Picks

Aegion currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same space include Construction Partners, Inc. ROAD, frontdoor, inc. FTDR and Quanex Building Products Corporation NX, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Construction Partners’ earnings for the current quarter are expected to grow 19%.

frontdoor has a three-five year expected EPS growth rate of 15.5%.

Quanex’s earnings growth rate is projected at 42.3% for the current year.

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