Primoris Services (PRIM): Assessing Valuation Following Record Q3 Results and Revenue Surge

Primoris Services (PRIM) attracted attention after it reported a 32% increase in year-over-year revenue and delivered record third-quarter results, surpassing analyst expectations and outperforming other companies in its sector.

See our latest analysis for Primoris Services.

Primoris Services’ momentum has been impressive. After its record results, the share price has surged more than 64% year to date, reflecting renewed confidence in its growth prospects. The company’s long-term story is even stronger, with a 501.85% total shareholder return over the past three years highlighting persistent value creation for investors.

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With shares riding high after this earnings surge, the big question now is whether Primoris is still undervalued, or if investors have already priced in the next phase of its growth. Is there still a buying opportunity here, or has the market gotten ahead of itself?

Most Popular Narrative: 17.8% Undervalued

Primoris Services’ last close at $126.13 is well below the narrative’s fair value estimate of $153.36, signaling significant upside potential according to the broadest-followed outlook. That dynamic between market price and future narrative value sets the stage for the unfolding debate on what comes next.

Operational execution, improved productivity, and a favorable project mix in core segments (especially Utilities) are driving company-wide gross margin improvement and improved cash conversion. These factors structurally enhance Primoris's earnings and free cash flow profile.

Read the complete narrative.

Want to peek behind the curtain and see what’s fueling that aggressive fair value? The narrative’s assumptions hinge on rising profit margins, an earnings trajectory usually reserved for elite growth stories, and a profit multiple that could surprise even the bulls. Craving the exact playbook and bold math behind this projection? Take a closer look as hidden drivers await discovery.

Result: Fair Value of $153.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent margin pressures and potential setbacks in securing key data center or renewables contracts could quickly challenge the optimistic outlook for Primoris Services.

Find out about the key risks to this Primoris Services narrative.

Another View: SWS DCF Model Raises Questions

While multiples suggest Primoris Services is attractively valued compared to peers, our DCF model offers a more reserved estimate of intrinsic value. In fact, the latest SWS DCF calculation indicates the current share price ($126.13) sits above its fair value of $110.49. This raises the question of whether the market may be overestimating the company's future cash flows.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Primoris Services for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 927 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Primoris Services Narrative

If you’re eager to challenge the consensus or dig into the numbers on your own terms, you can shape your own outlook in just a few minutes. Do it your way

A great starting point for your Primoris Services research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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