Stock Analysis

Is It Too Late To Consider Buying Primoris Services Corporation (NASDAQ:PRIM)?

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NasdaqGS:PRIM
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Primoris Services Corporation (NASDAQ:PRIM), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Primoris Services’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Primoris Services

What's the opportunity in Primoris Services?

Good news, investors! Primoris Services is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 15.63x is currently well-below the industry average of 27.48x, meaning that it is trading at a cheaper price relative to its peers. However, given that Primoris Services’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Primoris Services look like?

earnings-and-revenue-growth
NasdaqGS:PRIM Earnings and Revenue Growth February 22nd 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Primoris Services. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since PRIM is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on PRIM for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PRIM. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you'd like to know more about Primoris Services as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Primoris Services has 2 warning signs and it would be unwise to ignore them.

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