Should You Think About Buying Primoris Services Corporation (NASDAQ:PRIM) Now?

By
Simply Wall St
Published
January 07, 2022
NasdaqGS:PRIM
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Primoris Services Corporation (NASDAQ:PRIM), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. 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. But what if there is still an opportunity to buy? 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.

View our latest analysis for Primoris Services

What is Primoris Services worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14% below my intrinsic value, which means if you buy Primoris Services today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $29.67, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? 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 an opportunity to buy later on. 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 January 7th 2022

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 30% over the next couple of years, the future seems bright 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? It seems like the market has already priced in PRIM’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on PRIM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 2 warning signs for Primoris Services (1 is a bit unpleasant) you should be familiar with.

If you are no longer interested in Primoris Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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