Primoris Services Stock Down 10% Post Q3 Results: Buy the Dip or Wait?

Primoris Services Corporation PRIM dipped 9.9% since reporting its third-quarter 2025 financial results on Nov. 3, underperforming the Zacks Building Products - Heavy Construction industry, the broader Zacks Construction sector and the S&P 500 index.This Texas-based specialty construction and infrastructure company’s third-quarter 2025 adjusted earnings of $1.88 per share and total revenues of $2.18 billion topped the Zacks Consensus Estimate by 42.4% and 20.3%, respectively. On a year-over-year basis, the metrics grew 54.1% and 32.1%, respectively, attributable to solid execution and healthy end-market demand, accompanied by its cost control efforts and disciplined capital management. (read more: Primoris Q3 Earnings & Revenues Beat Estimates, '25 View Up)However, despite incremental revenue growth, the company is suffering from margin pressures, owing to several headwinds related to renewables projects, project delays and weather-related risks. The investors’ sentiments are likely to have been subdued by its near and long-term prospects, given the intensity of these headwinds.Image Source: Zacks Investment ResearchNotably, since Nov. 3, PRIM stock has also underperformed a few of the renowned market players, including Quanta Services, Inc. PWR, Jacobs Solutions Inc. J and Granite Construction Inc. GVA. During the said time frame, Jacobs Solutions inched up 0.1%, while Quanta and Granite tumbled 0.1% and 2.3%, respectively.Factors Boosting Primoris Services GrowthMarket Catalysts: The public spending infrastructure spending was already boosting PRIM’s prospects, with the recent Fed rate cut now taking the growth prospects further. The increased federal and state funding initiatives have been fueling infrastructure project demand in the United States for some time, with the trend expected to continue for a few more years. Backed by these tailwinds, Primoris Services is witnessing robust demand trends across power delivery, gas operations, communications, renewable energy and industrial markets.Moreover, the passing of the One Big Beautiful Bill Act is a cherry on the cake. This act highlights tax incentives like bonus depreciation across infrastructure investments and allocates about $150 billion of mandatory defense spending. This strategic move is in favor of Primoris Services as it has enabled its customers to have a substantial volume of projects lined up for the next few years. Besides, not only PRIM, but also other market players, including Jacobs Solutions and Quanta, are expected to benefit from this strategic move.Upbeat Bottom-Line View: Backed by the market tailwinds and its cost control initiatives, Primoris Services ended the third quarter of 2025 with adjusted earnings per share (EPS) 54.1% higher than the year-ago quarter. Also, the adjusted EPS during the first nine months of 2025 was $4.54, up 65.7% from $2.74 reported a year ago. The company is indeed benefiting from increased leverage from revenue growth, lower interest expense, and selling, general and administrative (SG&A) expenses.By being optimistic about its diversified market offerings and favorable market fundamentals, PRIM moved up its 2025 adjusted EPS outlook to the range of $5.35-$5.55 from the previously expected range of $4.90-$5.10. The revised estimated range compares favorably with the adjusted EPS of $3.87 reported in 2024.Reducing Debt Obligations: Owing to a disciplined capital management approach, PRIM is working efficiently in utilizing its free cash flow to reduce its debt obligations, alongside maintaining shareholder value. As of Sept. 30, 2025, its long-term debt (net of current portion) was $422.2 million, down 36% from $660.2 million as of 2024. At the end of the third quarter of 2025, the company had cash and cash equivalents of $431.4 million compared with $455.8 million. Although the cash position toned down a bit, it is sufficient for Primoris Services to meet its short-term obligations of $63.8 million.Image Source: Zacks Investment ResearchAs of the first nine months of 2025, net cash provided by operating activities increased to $327.5 million from $210.1 million reported in the year-ago comparable period.EPS Estimate Trend of PRIMAlthough the Zacks Consensus Estimate for 2025 and 2026 earnings has remained unchanged over the past 60 days, it indicates year-over-year growth of 31.3% and 9.3%, respectively.  Image Source: Zacks Investment ResearchThe favorable year-over-year comparisons indicate that PRIM will be able to capitalize on its in-house business strategies and ensure incremental prospects amid favorable market fundamentals.What is Pulling Down PRIM’s Prospects?As hinted before, despite top-line growth, PRIM is facing margin pressures across both its reportable segments, which directly questions its ability to maintain profitability scale despite cost controls and operational efficiency. Compared with the previous two quarters of 2025, the third quarter’s margins were more adversely impacted, resulting in a contraction of 120 basis points to 10.8%. For the first nine months of 2025, the gross margin remained flat year over year at 11.2%.The third quarter’s margins were mainly impacted by reduced higher-margin storm work in 2025 and the absence of favorable impacts from multiple renewables and industrial projects compared with 2024. Moreover, adverse impacts from increased costs on a few renewables projects because of unfavorable weather conditions and project delays added to the headwinds.PRIM’s Premium ValuationPRIM stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 22.85, as evidenced by the chart below.Image Source: Zacks Investment ResearchIs It Smart to Add PRIM Stock to Portfolio?Primoris Services is strongly capitalizing on the ongoing market trajectory toward public infrastructure demand backed by several government initiatives. Its solid execution, cost control, debt reduction move and robust demand across end markets such as power delivery, gas operations, renewables, and industrial services are boding well.However, margin pressures remain a key concern. Lower high-margin storm work, cost overruns on renewables projects and weather-related disruptions, along with a premium valuation, suggest limited near-term upside potential. While growth prospects remain favorable, sustaining profitability amid these headwinds will be crucial for investor confidence.Summing up, based on the above discussion and trends of the technical indicators, it is prudent for existing investors to hold onto this Zacks Rank #3 (Hold) stock for now. New investors are advised to wait for now and look for a better entry point when the trends start favoring the PRIM stock. 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(PWR): Free Stock Analysis Report Primoris Services Corporation (PRIM): Free Stock Analysis Report Granite Construction Incorporated (GVA): Free Stock Analysis Report Jacobs Solutions Inc. (J): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks