“Primoris Services Corp. (PRIM), a specialty contractor and infrastructure company, has reeled off six consecutive quarters of sales growth, up 42% or more. Most recently, Primoris reported June-quarter revenue of $352 million, up 73%, or 28% excluding acquisitions. Per-share profits surged 75% to $0.28, exceeding the consensus by $0.04. The order backlog increased 18% to exceed $1 billion. Citing favorable trends in cash flow and confidence in its long-term growth prospects, Primoris boosted its quarterly dividend 20% to $0.03, payable October 14.
“The stock ranks among the cheapest one-fifth of U.S. stocks based on three of the most effective valuation ratios: enterprise ratio, price/free cash flow and price/sales. Shares trade at 12 times the 2011 consensus profit estimate, a 10% discount to the average for construction and engineering stocks in the S&P 1500 Index. Per-share earnings are expected to climb 27% to $0.91 for 2011, and the 2012 consensus of $0.90 appears conservative considering Primoris’ recent acquisitions and exposure to the pipeline-construction market. The stock, with an impressive Value score of 83, is a Buy.”
Richard J. Moroney, CFA, Upside, 9/5/11
