Although ENGlobal (ENG) has been investing heavily to capitalize on new business opportunities, the company’s revenues declined in its last reported quarter. Furthermore, given that the company is still not generating profits, its shares look highly overvalued at their current price level. Let’s take a closer look.Founded in 1985, Houston, Tex.-based ENGlobal Corporation (ENG) is an energy and automation services provider that operates through engineering, procurement, and construction (EPCM) and automation segments in the United States and internationally. Shares of ENG have soared 193.6% over the past year on investors’ growing optimism about r the clean energy sector’s prospects.
But as a result of operational restrictions caused by the COVID-19 pandemic, the company’s business development efforts were significantly hampered. ENG saw a 39.1% year-over-year decline in commercial revenue in the first quarter of 2021, and its stock price has dipped 28.1% over the past three months.
Although the company’s efforts to deliver innovative Haldor Topsoe technology to its customers in the United States could expand its market reach significantly, its weak financials pose a major risk to its prospects. ENG recorded significant losses in its last reported quarter.