Primoris Services Corporation Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?
Primoris Services Corporation (NASDAQ:PRIM) shares fell 9.8% to US$20.20 in the week since its latest annual results. It was a credible result overall, with revenues of US$3.1b and statutory earnings per share of US$1.61 both in line with analyst estimates, showing that Primoris Services is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Primoris Services
Taking into account the latest results, the latest consensus from Primoris Services's four analysts is for revenues of US$3.39b in 2020, which would reflect a notable 9.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to climb 11% to US$1.80. In the lead-up to this report, analysts had been modelling revenues of US$3.38b and earnings per share (EPS) of US$1.93 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$28.75, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Primoris Services analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$27.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Next year brings more of the same, according to analysts, with revenue forecast to grow 9.3%, in line with its 12% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.6% per year. So although Primoris Services is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Primoris Services. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$28.75, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Primoris Services analysts - going out to 2021, and you can see them free on our platform here.
You can also see whether Primoris Services is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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.
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