Primoris (PRIM)

Infrastructure construction company Primoris (NYSE:PRIM) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 32.1% year on year to $2.18 billion. Its non-GAAP profit of $1.88 per share was 38.8% above analysts’ consensus estimates.

Company Overview

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

Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, fire escapes need to be inspected every five years. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.

Competitors of Primoris include Flour (NYSE:FLR), AECOM (NYSE:ACM), and private company Kiewit.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Primoris’s 17.1% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Primoris’s annualized revenue growth of 16.1% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

Primoris also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Primoris’s backlog reached $11.06 billion in the latest quarter and averaged 143% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Primoris’s products and services but raises concerns about capacity constraints.

This quarter, Primoris reported wonderful year-on-year revenue growth of 32.1%, and its $2.18 billion of revenue exceeded Wall Street’s estimates by 17.7%.

Looking ahead, sell-side analysts expect revenue to grow 2.1% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

At StockStory, we prefer high gross margin businesses because they indicate the company has pricing power or differentiated products, giving it a chance to generate higher operating profits.

Primoris has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 10.9% gross margin over the last five years. Said differently, Primoris had to pay a chunky $89.10 to its suppliers for every $100 in revenue.

This quarter, Primoris’s gross profit margin was 10.8%, marking a 1.2 percentage point decrease from 12% in the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Primoris’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 4.9% over the last five years. This profitability was paltry for an industrials business and caused by its suboptimal cost structureand low gross margin.

Looking at the trend in its profitability, Primoris’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Primoris generated an operating margin profit margin of 6.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS 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. However, we take this with a grain of salt because its operating margin didn’t improve and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Primoris, its two-year annual EPS growth of 39.1% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Primoris reported adjusted EPS of $1.88, up from $1.22 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Primoris’s full-year EPS of $5.67 to shrink by 4.1%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Primoris has shown poor cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.8%, lousy for an industrials business.

Taking a step back, an encouraging sign is that Primoris’s margin expanded by 5.8 percentage points during that time. 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 clocked in at $148.4 million in Q3, equivalent to a 6.8% margin. The company’s cash profitability regressed as it was 2.8 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Primoris’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 11%, slightly better than typical industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Primoris’s ROIC averaged 4.3 percentage point increases over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Primoris reported $431.4 million of cash and $815.2 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $539.5 million of EBITDA over the last 12 months, we view Primoris’s 0.7× net-debt-to-EBITDA ratio as safe. We also see its $37.23 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Primoris beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock remained flat at $144.01 immediately following the results.

Updated: December 4, 2025 at 9:05 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Primoris.

Primoris is a high-quality business worth owning. First of all, the company’s revenue growth was exceptional over the last five years. And while its projected EPS for the next year is lacking, its backlog growth has been marvelous. On top of that, Primoris’s rising cash profitability gives it more optionality.

Primoris’s P/E ratio based on the next 12 months is 22.9x. Scanning the industrials space today, Primoris’s fundamentals really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $149.08 on the company (compared to the current share price of $126.01), implying they see 18.3% upside in buying Primoris in the short term.