Primoris Services CorporationPRIM has been witnessing upward revisions over the last 60 days. The Zacks Consensus Estimate moved up 7% to $1.18 for fiscal 2017 and 4% to $1.46 for fiscal 2018. A positive trend in estimate revisions reflects optimism over the company's bright prospects.
Presently, Primoris currently carries a Zacks Rank #3 (Hold) with an impressive Zacks VGM Score of A. Here V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three scores (Value - B, Growth - A, Momentum - B). Such a score allows you to eliminate the negative aspects of stocks and select winners. The VGM Score of B, along with some other key metrics, makes the company a solid choice for investors.
Primoris outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 6.1%.
Its share price performance also remains impressive. Year to date, the company has outperformed the industry it belongs to. The stock has gained 24%, while the industry declined 1%.
Here's what might drive the stock higher and why investors should hold on to the stock.
Return on Assets (ROA) : Primoris currently has a ROA of 4.9%, while the industry's ROA is 2.3%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Return on equity (ROE): Primoris' trailing 12-month ROE of 11.3% reinforces its growth potential. The company's ROE is higher than ROE of 7.7% for the industry, reflecting its tactical efficiency in using shareholders' funds.
Positive Growth Projections: The Zacks Consensus Estimate for earnings for fiscal 2017 reflects a year-over-year growth of 73.5% and for fiscal 2018 projects growth of 23.7%.
Further, the company's long-term earnings growth rate of 10% holds promise.
Growth Drivers in Place : In the last reported quarter, all four of Primoris' operating segments witnessed revenue growth, helping it to attain the highest quarterly revenues in the company's history. The revenues in turn led to strong earnings, driven by the exceptional operating performance, especially at Pipeline & Underground segment's Rockford division.
The company will benefit from its efforts to strengthen sales teams and consequently more consistent project wins. In addition to investing in equipment, the company also is striving to grow through acquisitions. Bidding opportunities remain robust, which will continue to increase backlog.
Investors might want to hold on to the stock at present as it has ample prospects for outperforming peers in the near future.
Stocks to Consider
MasTec has an expected long-term earnings growth rate of 14% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
U.S. Concrete carries a Zacks Rank #2 (Buy). It has an expected long-term earnings growth rate of 10%.
Owens Corning, another Zacks Rank #2 stock, has an expected long-term earnings growth rate of 14.8%.
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