Can Power Delivery Continue to Anchor Primoris' Margin Expansion?

Primoris Services Corporation (PRIM) is strengthening its position in the utility infrastructure market, with power delivery emerging as a key driver of profitability and long-term growth. The business continues to benefit from rising investments in grid modernization, transmission upgrades and substation construction.

The company delivered another solid quarter in the second quarter of 2025, with the power delivery business standing out as a key contributor to its margin improvement. The segment recorded higher revenues and significant margin expansion, supported by better rates on renewed MSA contracts, increased transmission and substation work, and stronger field productivity. As a result, the Utilities segment’s gross margin rose to 14.1% from 10.3% a year ago, with power delivery accounting for most of the improvement.

The company’s strategy to enhance profitability within power delivery continues to show results. Primoris has maintained disciplined project selection and focused on recurring MSA-based work rather than taking on large, fixed-price contracts with higher risk. This approach, along with strong customer engagement on grid resiliency programs, has improved operational stability and pricing power. As of June 30, 2025, the MSA backlog increased $600 million sequentially, driven primarily by increased activity across the utility businesses, particularly power delivery.

Primoris is well-positioned to benefit from multiyear utility investments aimed at improving reliability and integrating renewables. With continued focus on productivity, workforce development and balanced project execution, power delivery remains well placed to anchor the company’s margin expansion in the coming quarters. The company expects Utilities margins to remain within the 10-12% range for 2025, up from the prior expectation of 9% to 11%, supported by steady growth and operating discipline.

Competitors Strengthening in Power Infrastructure

Primoris operates in a competitive landscape that includes peers such as EMCOR Group, Inc. (EME) and Quanta Services, Inc. (PWR), both expanding their presence in power delivery and grid modernization.

EMCOR is broadening its role in transmission and distribution work, supported by rising onshoring activity and industrial facility demand. The company’s mechanical and electrical construction expertise enables it to participate in large-scale utility and renewable projects, contributing to steady backlog growth.

Quanta Services remains a leading player in power infrastructure construction, with strong capabilities in transmission line upgrades and renewable grid integration. The company continues to benefit from significant utility capital spending and federal investment programs focused on modernizing the energy network.

The expansion of EMCOR and Quanta Services in the power delivery space highlights a highly active market environment. This broader industry momentum supports Primoris’ long-term growth prospects and reinforces the strong fundamentals driving utility and energy infrastructure demand across North America.

PRIM’s Price Performance, Valuation & Estimates

Shares of Primoris have gained 64.4% in the past three months compared with the Zacks Building Products - Heavy Construction industry’s growth of 22.9%.

From a valuation standpoint, PRIM trades at a forward 12-month price-to-earnings ratio of 25.79X, up from the industry’s 23.08X.

Primoris’ earnings estimates for 2025 and 2026 have remained unchanged in the past 30 days. The estimated figures for 2025 and 2026 indicate 31.3% and 9.3% year-over-year growth, respectively.

PRIM’s Zacks Rank

Primoris currently has a Zacks Rank #3 (Hold). 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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