Stock Analysis

Analysts Are Betting On Primoris Services Corporation (NASDAQ:PRIM) With A Big Upgrade This Week

  •  Updated
NasdaqGS:PRIM
Source: Shutterstock

Primoris Services Corporation (NASDAQ:PRIM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the upgrade, the latest consensus from Primoris Services' three analysts is for revenues of US$4.3b in 2022, which would reflect a notable 18% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to increase 6.5% to US$2.44. Before this latest update, the analysts had been forecasting revenues of US$3.8b and earnings per share (EPS) of US$2.27 in 2022. Sentiment certainly seems to have improved in recent times, with a substantial gain in revenue and a small increase to earnings per share estimates.

See our latest analysis for Primoris Services

earnings-and-revenue-growth
NasdaqGS:PRIM Earnings and Revenue Growth August 11th 2022

As a result, it might be a surprise to see that the analysts have cut their price target 5.4% to US$29.00, which could suggest the forecast improvement in performance is not expected to last. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Primoris Services analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$21.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Primoris Services' growth to accelerate, with the forecast 40% annualised growth to the end of 2022 ranking favourably alongside historical growth of 9.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Primoris Services to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Primoris Services.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Primoris Services going out to 2024, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

What are the risks and opportunities for Primoris Services?

Primoris Services Corporation, a specialty contractor company, provides a range of construction, fabrication, maintenance, replacement, and engineering services in the United States and Canada.

View Full Analysis

Rewards

  • Price-To-Earnings ratio (11.5x) is below the US market (15.5x)

  • Earnings are forecast to grow 12.8% per year

  • Earnings have grown 14.3% per year over the past 5 years

Risks

  • Debt is not well covered by operating cash flow

  • Significant insider selling over the past 3 months

View all Risks and Rewards

Share Price

Market Cap

1Y Return

View Company Report