Primoris Services Corporation’s PRIM Energy segment won several contracts worth $650 million.
These awards are spread across six states and include significant projects from state-of-the-art natural gas power generation plants. The natural gas power generation plants provide critical generation capacity in peak usage conditions to the highways and bridges for smooth communication.
These projects are expected to begin in the second and third quarters of 2023.
Energy/Renewables’ Continuous Contract Flow: A Boon
Primoris — a Zacks Rank #3 (Hold) company — has been reaping benefits from strong project execution in the Energy segment, which accounted for 40.3% of 2022 total revenues.
In April, the segment won two renewable energy contracts worth $200 million. One of these contracts was for a carbon capture, utilization and storage pipeline project located in the Midwest. The other contract’s scope includes the engineering, procurement and construction of a utility-scale solar facility in the Southwest.
In early 2023, Primoris won multiple solar projects worth $290 million. These contracts expand the company’s presence in new geographies and diversify its scope of work with smaller utility-scale solar projects.
It is to be noted that solar projects continue to drive the Energy segment. This segment’s revenues increased 71% in first-quarter 2023. The upside was backed by increased renewable energy activity, pipeline project work, industrial activity on the Gulf Coast and solid contributions from the PLH acquisition. Gross margin also rose 110 basis points, primarily on solid contributions from higher-margin renewable energy projects.
Total backlog at the first quarter’s end was $5,559.3 million, including $3,546.9 million as Fixed and $2,012.4 million as MSA. Of this backlog, the Energy segment contributed $3,602.2 million in the said period.
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Shares of this leading specialty contractor have outperformed the Zacks Building Products - Heavy Construction industry in the year-to-date period. The company has been benefiting from solid performance across the segments. Biden’s renewable energy drive is also expected to boost its growth.
Zacks Rank & Key Picks
PRIM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are:
North American Construction Group Ltd. NOA provides equipment maintenance and mining and heavy construction services to the resource development and industrial construction markets in Canada, the U.S. and Australia. Its range of services includes constructability reviews, budgetary cost estimates, design-build construction, project management, contract mining and equipment maintenance.
NOA’s 2023 estimate indicates growth of 7.6% and 1.1% in revenues and earnings, respectively.
NOA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dycom Industries, Inc. DY carries a Zacks Rank #1. DY has a trailing four-quarter earnings surprise of 153.7%, on average.
The Zacks Consensus Estimate for DY’s fiscal 2024 sales and EPS indicates 7.7% and 36.1% growth, respectively, from the year-ago period’s levels.
EMCOR Group EME, a Zacks Rank #2 (Buy) company, has been benefiting from double-digit growth across the U.S. segments, resilient end markets, solid RPOs and bolt-on acquisitions.
The consensus mark for EME’s 2023 earnings suggests 9.2% year-over-year growth.
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