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How Does Primoris Services Corporation's (NASDAQ:PRIM) Earnings Growth Stack Up Against Industry Performance?

Simply Wall St

After reading Primoris Services Corporation's (NASDAQ:PRIM) latest earnings update (31 March 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether PRIM has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.

View our latest analysis for Primoris Services

Did PRIM's recent earnings growth beat the long-term trend and the industry?

PRIM's trailing twelve-month earnings (from 31 March 2019) of US$79m has jumped 20% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.5%, indicating the rate at which PRIM is growing has accelerated. What's the driver of this growth? Let's take a look at if it is only due to industry tailwinds, or if Primoris Services has experienced some company-specific growth.

NasdaqGS:PRIM Income Statement, July 30th 2019
NasdaqGS:PRIM Income Statement, July 30th 2019

In terms of returns from investment, Primoris Services has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 5.9% exceeds the US Construction industry of 5.1%, indicating Primoris Services has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Primoris Services’s debt level, has increased over the past 3 years from 10% to 14%.

What does this mean?

Primoris Services's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Primoris Services to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for PRIM’s future growth? Take a look at our free research report of analyst consensus for PRIM’s outlook.

  2. Financial Health: Are PRIM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.