Why Primoris Services Corporation (NYSE:PRIM) Could Be Worth Watching

Primoris Services Corporation (NYSE:PRIM), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. As a mid-cap 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.

See our latest analysis for Primoris Services

What's The Opportunity In Primoris Services?

The stock is currently trading at US$84.91 on the share market, which means it is overvalued by 27% compared to our intrinsic value of $66.97. This means that the opportunity to buy Primoris Services at a good price has disappeared! But, is there another opportunity 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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Primoris Services generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 34% 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? PRIM’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe PRIM should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on PRIM for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for PRIM, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Primoris Services, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Primoris Services you should know about.

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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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.