3 Big Reasons to Love Primoris (PRIM)

What a fantastic six months it’s been for Primoris. Shares of the company have skyrocketed 64.3%, hitting $128.06. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.

Is it too late to buy PRIM? Find out in our full research report, it’s free for active Edge members.

Why Are We Positive On PRIM?

Listed on the NASDAQ in 2008, Primoris (NYSE:PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.

1. Surging Backlog Locks In Future Sales

We can better understand Construction and Maintenance Services companies by analyzing their backlog. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Primoris’s future revenue streams.

Primoris’s backlog punched in at $11.06 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 143%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Primoris for the long term, enhancing the business’s predictability.

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Primoris’s EPS grew at an astounding 22.8% compounded annual growth rate over the last five years, higher than its 17.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

3. Increasing Free Cash Flow Margin Juices Financials

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Primoris’s margin expanded by 5.9 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat. Primoris’s free cash flow margin for the trailing 12 months was 6.6%.

Final Judgment

These are just a few reasons why Primoris ranks highly on our list, and after the recent rally, the stock trades at 23.5× forward P/E (or $128.06 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

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