Is Primoris Services (PRIM) Still a Buy at a New 52-Week High? A Deep Dive into Earnings, Valuation, and Industry Positioning

Primoris Services (NYSE: PRIM) has surged to a new 52-week high in July 2025, driven by robust earnings growth and a strategic pivot toward renewable energy infrastructure. But has the rally priced in all future potential—or is the stock still a compelling buy? Let's dissect the company's earnings momentum, valuation metrics, and industry positioning to determine whether this surge reflects optimism or overvaluation.

Earnings Momentum: Strong Backlog Fuels Growth

Primoris delivered a stellar Q1 2025 report, with revenue jumping 16.7% year-over-year to $1.65 billion. The Energy and Utilities segments were the standout performers:
- Energy Segment: Revenue rose 17% to $1.11 billion, driven by surging demand for renewable energy projects. Operating income grew 18.4% to $78.9 million, though gross margins dipped slightly to 10.7% from 11.0% in 2024.
- Utilities Segment: Revenue climbed 15.5% to $563.4 million, with gross margins expanding to 9.2% (up from 6.0%). This segment's performance highlights Primoris's ability to capitalize on power delivery and gas infrastructure tailwinds.

The company's $11.4 billion backlog (as of March 31, 2025) provides a clear runway for sustained revenue growth. Management reiterated full-year 2025 guidance, projecting net income of $203.3–$214.3 million and adjusted EBITDA of $440–$460 million. With $351.6 million in unrestricted cash and a $150 million share repurchase program, Primoris is also prioritizing shareholder returns through dividends and buybacks.

Valuation: A Tale of Two Metrics

While earnings are strong, valuation metrics tell a mixed story.
- Price-to-Earnings (P/E) Ratio: At 24.64 trailing and 21.02 forward, PRIM's P/E is below the construction industry average of 33.9x and far lower than peers like MasTec (67.7x) and Quanta Services (66.6x). This suggests Primoris is undervalued relative to its peers.
- PEG Ratio: However, the PEG of 1.47 (based on 2025 guidance) implies the stock is overvalued relative to its growth prospects. A PEG above 1 typically signals that a stock is trading at a premium to its expected earnings growth.
- Price-to-Sales (P/S): At 0.76, PRIM's P/S ratio is attractive compared to industry averages, reflecting its ability to convert revenue into profit.

The disconnect comes when comparing the current price to intrinsic value. A discounted cash flow (DCF) model estimates PRIM's fair value at $62.34, while the stock trades at $92.83 as of July 26, 2025—49% above its intrinsic value. This overvaluation raises questions about whether the market has already priced in all of Primoris's future growth.

Industry Positioning: A Leader in a High-Growth Sector

Primoris operates in a sector poised for long-term growth, with North American utilities and energy firms accelerating investments in electrification, grid modernization, and renewable energy. The company's $5.8 billion MSA backlog ensures recurring revenue from long-term contracts, while its focus on margin expansion and operational efficiency gives it an edge over competitors like Tutor Perini (P/E: -16.9x) and Matrix Service (P/E: -18.8x), which are currently unprofitable.

However, Primoris faces margin pressures in the Energy segment due to rising material costs and project complexity. While gross profit margins in the Utilities segment are expanding, the Energy segment's 10.7% margin (down from 11.0%) hints at potential headwinds. Investors should monitor whether these trends persist or reverse as the company scales its renewable energy operations.

Is the Rally Justified?

Primoris's recent rally reflects its strong earnings, robust backlog, and strategic alignment with energy transition trends. However, the valuation suggests caution:
1. Strengths: Undervaluation relative to peers, strong backlog, and disciplined capital allocation (e.g., $150 million buyback).
2. Risks: Overvaluation compared to intrinsic value, margin pressures in the Energy segment, and macroeconomic uncertainties (e.g., interest rates, regulatory shifts).

Investment Thesis

For long-term investors, Primoris remains a compelling buy, but the current price may be a short-term overreach. The stock is undervalued relative to its industry peers and fundamentals but overvalued compared to its intrinsic value. A pullback to the DCF-estimated $62.34 would offer a more attractive entry point. For those already invested, the robust backlog and 2025 guidance justify holding, but new buyers should consider dollar-cost averaging to mitigate valuation risks.

In conclusion, Primoris is a high-quality business with a strong growth story—but the recent 52-week high may have priced in much of its future potential. Patience and discipline could reward investors as the company navigates its next phase of expansion.