Primoris Services Stock Up 22.8% Since Q2 Earnings: Buy or Wait?

Primoris Services Corporation’s PRIM share price performance has trended upward by 22.8% since reporting the second quarter of 2025 earnings on Aug. 4, outperforming the Zacks Building Products - Heavy Construction industry, the broader Zacks Construction sector and the S&P 500 index. The detailed share price performance can be studied from the chart below.Image Source: Zacks Investment ResearchThe company’s second-quarter 2025 adjusted earnings of $1.68 per share and revenues of $1.89 billion topped the Zacks Consensus Estimate by 58.5% and 12.3%, respectively. Year over year, the metrics rose 162.5% and 20.9%, respectively, mainly driven by the growing demand for infrastructure solutions across power generation, electric utility and data centers throughout North America. With several federal and state initiatives supporting public infrastructure demand, the company remains well-positioned for outbound exploration in the market and strengthening its earnings potential in the process. Besides external factors, its internal approach in reducing debt levels and enhancing operating leverage by controlling costs and expenses is not to be missed. Total backlog as of June 30, 2025, increased 10% to $11.49 billion from $10.45 billion a year ago.Besides, Primoris Services boosted investors’ confidence by lifting its 2025 adjusted earnings per share (EPS) and adjusted EBITDA guidance. It now expects adjusted EPS between $4.90 and $5.10 (up from previously expected in the range of $4.20-$4.40) and adjusted EBITDA between $490 million and $510 million (up from priorly expected range of $440-$460 million).What is Driving Primoris Services’ Momentum?Market Trends in Favor: Primoris Services’ expertise mainly lies in constructing utility-scale power generation resources and infrastructure supporting the transmission and distribution of power. As the demand trend for data center infrastructure is going strong currently, the company is looking for opportunities and acting on them to expand its market exposure. The market for data centers and power generation is proving to be incremental for other key market players as well, like EMCOR Group, Inc. EME, Quanta Services, Inc. PWR and MasTec, Inc. MTZ.Recently, PRIM highlighted the evaluation process for about $1.7 billion of work related to data centers, which it expects to receive contracts for by the end of 2025. These projects include solutions across early-stage site preparation, power generation, utility infrastructure and fiber network construction. This prospective multi-year opportunity is expected to boost the company’s revenue visibility as well as expand its market exposure towards new project possibilities in the future. As of the second quarter of 2025, the company is planning to submit bids for more than $2.5 billion in natural gas generation projects for the upcoming years, alongside about $20-$30 billion worth of solar projects planned through 2028.Ensuring Operating Leverage: The company is undergoing several internal initiatives to boost its business operations and support revenue growth amid a favorable external market environment. Although these efforts are elevating the cost structure in the short term, the scale prospects in the long term weigh heavily.Amid these strategic efforts, PRIM is consistently putting efforts into keeping the cost and expense structure mix pliable to not pressurize margins despite revenue growth. During the first six months of 2025, the company’s gross margin expanded year over year by 60 basis points (bps) to 11.4% because of rising leverage from the increased top line and its ongoing cost-optimization efforts. During the same time frame, selling, general and administrative expenses (as a percentage of revenue) contracted year over year by 50 bps to 5.8%.Reducing Debt Levels: PRIM follows a balanced capital allocation approach, which encompasses effectively using the free cash to reduce debt levels, invest in business opportunities and pay dividends. 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.As of the second quarter of 2025, the company had $390.3 million worth of cash and cash equivalents compared with $455.8 million at 2024-end. As of the said time frame, it had $144.6 million of net cash provided by operating activities against $12.4 million of net cash used in operating activities a year ago. Currently, Primoris Services has sufficient liquidity to meet its short-term obligations of $78.1 million.Understanding PRIM’s Competitive Position in the MarketPrimoris Services holds a solid yet smaller-scale position compared with its larger peers, EMCOR, MasTec and Quanta. While these market players dominate with greater scale and diversification across power, communications and industrial infrastructure, Primoris Services competes by focusing on niche strengths in utility, pipeline and specialty contracting. EMCOR’s breadth in mechanical and electrical construction, MasTec’s leadership in communications and energy transition projects, and Quanta Services’ dominance in electric power infrastructure create intense competition. However, Primoris Services differentiates itself with strong regional relationships, mid-market flexibility and targeted growth in renewable and civil sectors.Although the mentioned market players often secure the largest projects, PRIM is competitive on specialized contracts and selective bidding, giving it an edge in profitability and execution in its chosen areas. Its ability to balance risk and remain agile helps it carve out a defensible position despite the scale advantage of EMCOR, MasTec and Quanta Services.Month-to-date, shares of EMCOR and Quanta have tumbled 3.1% and 3.7%, respectively, while those of MasTec have inched up 2.1%.Earnings Estimate Revision of PRIMPRIM’s earnings estimates for 2025 and 2026 have trended upward in the past seven days to $4.67 and $5.23 per share, respectively. The estimated figures for 2025 and 2026 imply year-over-year growth of 20.7% and 12.1%, 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.PRIM Trading at a PremiumPRIM stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 22.28, as evidenced by the chart below. The overvaluation of the stock compared with its industry peers indicates its strong potential in the market. However, this trend is making it difficult for investors to figure out a suitable entry point.Image Source: Zacks Investment ResearchShould You Go for PRIM Stock?Primoris Services is strongly capitalizing on the ongoing market trajectory toward public infrastructure demand. Several government initiatives backing this demand are currently reaching their peak and are expected to continue for more coming years. Project demand for sectors like data centers is going strong, opening new doors for companies like PRIM to explore new service possibilities despite certain ongoing macro risks.The long-term positioning of the company is visible from the upward earnings estimate revisions and positive year-over-year comparisons, despite a premium valuation obstructing investors’ judgment.Analysts’ optimism regarding PRIM stock is reflected in nine of the 10 recommendations pointing to a "Strong Buy”, representing 90% of all recommendations.Image Source: Zacks Investment ResearchThus, based on the above discussion and trends of the technical indicators, this Zacks Rank #1 (Strong Buy) stock is a decent choice to be added to the portfolio for now. 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Click to get this free report Quanta Services, Inc. (PWR): Free Stock Analysis Report EMCOR Group, Inc. (EME): Free Stock Analysis Report Primoris Services Corporation (PRIM): Free Stock Analysis Report MasTec, Inc. (MTZ): 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