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Aegion Corporation (AEGN)

This leader in infrastructure protection and maintenance beat earnings estimates by four cents last quarter, and analysts are forecasting the company to grow at a more than 20% rate for next year.

Aegion Corporation (AEGN)
From The Periscope Report

We always recommend companies that provide a product or service that is a necessity. And we prefer companies that have a proprietary technology that creates high barriers to entry. Aegion Corporation (AEGN) has both attributes.

AEGN is a global leader in infrastructure protection and maintenance, providing proprietary technologies and services: (i) to protect against the corrosion of industrial pipelines; (ii) to rehabilitate and strengthen potable water, wastewater, energy and mining piping systems as well as buildings, bridges, tunnels and other industrial structures; and (iii) to utilize integrated professional services in engineering, procurement, construction, maintenance and turnaround services for a broad range of energy related industries. AEGN has customers in 80 countries, more than any competitor. The company has over 200 patents, which is a huge barrier to entry.

One particular strength for AEGN is in potable water, treating it and keeping it safe from corrosives. Potable water is the world’s largest problem and an area we have been researching for over 30 years, so we like to recommend companies that possess superior water technology.

AEGN hired a new CEO in 2014 and he initiated a massive restructuring in January 2016 that has already been completed. This restructuring included selling two large units and cutting the workforce by 14%. Amazingly, the restructuring was completed in just four months, a testament to a strong management team.

Due to the restructuring, sales and earnings will decline in 2016, but not by much. Growth will resume in 2017 and the stock is trading for just 12.8 times our 2017 earnings estimate of $1.50 per share, far too cheap for a market dominator.

Tom Byrne, The Periscope Report, 4025 Sunset Ridge Drive, Canyon Ferry Crossing, Helena, MT 59602, 406-465- 4663, June 22, 2016