Is Primoris Services Stock Worth Buying at a Premium P/E Valuation?

Primoris Services Corporation PRIM shares are trading at a premium compared with the Zacks Building Products – Heavy Construction industry. The company’s forward 12-month price-to-earnings (P/E) ratio stands at 22.8X, above the industry’s 21.58X. It is also higher than the broader Construction sector’s 19.85X and the S&P 500 multiple of 22.59X.

Primoris Services Stock Trades at a Premium

Moreover, Primoris Services is currently trading at a discount compared with similar players like EMCOR Group, Inc. EME, Quanta Services, Inc. PWR and MasTec, Inc. MTZ. EMCOR, Quanta Services and MasTec are trading higher with forward 12-month P/E multiples of 24.27, 32.18 and 25.07.

Although the premium valuation may raise some concerns, it underscores the market’s confidence in PRIM’s robust financial performance and its growth potential. On Aug. 29, 2025, the stock hit a new 52-week high of $120.22, reflecting strong upward momentum. Shares of Primoris Services have gained 56.3% in the past three months compared with the industry’s growth of 23.3%. Over the same period, the broader construction sector gained 8.5% and the S&P 500 increased 9.8%.

The company is benefiting from rising demand for renewable energy projects, growing exposure to data center and communications infrastructure, and margin improvement in utilities. In addition, a record backlog is providing strong visibility for growth.

PRIM Stock’s 3 Months’ Price Performance

Let us delve into the areas fueling growth and understand why investors may still find value in the stock despite its higher trading multiple.

Expanding Renewables and Power Projects Boost Primoris Services

Primoris Services is capitalizing on the rising demand for clean energy, with utility-scale solar and gas generation providing meaningful growth opportunities. Renewables remain a major growth engine, with the segment on track to generate close to $2.5 billion in 2025 revenues, up from the earlier-mentioned $2.2-$2.3 billion. In the second quarter of 2025, renewables revenues benefited from $100 million pulled forward from the second half of 2025 and $50 million from 2026. Despite weather-related margin pressures, the business continues to post solid growth.

In addition, Primoris Services is preparing bids for more than $2.5 billion in natural gas generation projects and monitoring $20-$30 billion worth of solar opportunities through 2028. This robust pipeline, combined with supportive legislation for tax incentives, provides long-term visibility and positions the company as a leading contractor in both solar and gas generation markets.

Data Center and Fiber Opportunities Support PRIM’s Growth

The rapid expansion of data centers and communications networks has opened avenues for growth, supported by the company’s expertise in power and infrastructure services. Data center-related work is emerging as a significant driver, with $1.7 billion of opportunities under evaluation as of the second quarter of 2025. The company has already been shortlisted for $400-$500 million of this work, expected to be contracted by the year-end. These projects span site preparation, power generation, transmission and fiber build-outs.

Communications revenues also moved up in the double digits in the second quarter of 2025, supported by fiber-to-the-home programs and rising demand from data centers. Strong execution has led customers to request expansion into new geographies, while long-haul and middle-mile EPC fiber projects present higher-margin opportunities. This positions Primoris Services to benefit as digital infrastructure investment accelerates.

Backlog Strengthens Growth Visibility for Primoris Services

A strong backlog reflects the company’s ability to secure new work and provides visibility into future revenue streams. Primoris Services reported a backlog of $11.5 billion at the end of the second quarter of 2025, up about $100 million sequentially. Growth was led by MSA backlog, which rose by more than $600 million, primarily from increased activity in power delivery. This recurring work strengthens revenue stability across market cycles.

Although the energy segment backlog dipped slightly due to the timing of bookings, renewables activity rebounded strongly in the early third quarter of 2025. The company expects bookings to accelerate through the rest of the year and into 2026. With a mix of utility, renewables and industrial services, the backlog provides investors with confidence in revenue visibility and earnings durability.

Debt Reduction Improves PRIM’s Financial Position

Primoris Services has continued to strengthen its balance sheet, with net debt-to-EBITDA dropping to 0.5X at the end of the second quarter of 2025. Regarding debt obligation reduction, as of June 30, 2025, the company’s long-term debt (net of current portion) reduced to $525 million from $660.2 million as of 2024-end.

In the second quarter of 2025, the operating cash flow reached $78 million, bringing year-to-date cash generation to nearly $145 million. This marked an improvement of $157 million from the prior year. The company expects full-year interest expenses of $33-$37 million, lower than the $44-$48 million projected at the start of 2025, highlighting the impacts of debt reduction efforts.

Analysts Project Upside Despite Premium Valuation

Despite its high valuation, Primoris Services’ upward revisions in earnings per share (EPS) estimates highlight analysts’ confidence in the stock. PRIM’s earnings estimates for 2025 and 2026 have trended upward in the past 30 days to $4.67 and $5.23 per share, respectively. The estimated figures imply year-over-year growth of 20.7% and 12.1%, respectively.

Meanwhile, EMCOR, Quanta Services and MasTec earnings in the current year are likely to witness year-over-year increases of 16.2%, 17.6% and 58%, respectively.

Final Verdict on Primoris Services’ Premium Valuation

PRIM’s premium valuation is supported by solid fundamentals. Growth in renewables, improving visibility from data center and fiber projects, and a record backlog are giving the company a strong base for 2025. At the same time, debt reduction and higher cash flows have strengthened its financial position, which adds weight to the stock’s recent performance.

While the multiple is above industry and sector levels, the stock trades at a discount to some peers, and earnings estimates for 2025 have been moving higher. With a Zacks Rank #2 (Buy), analysts project further upside, making the premium valuation well supported. For investors looking at long-term growth, the stock appears worth buying even at current levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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