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Primoris Unit Secures $27M Industrial Contract From a Client

Zacks Equity Research

ARB Underground, a unit of Primoris Services Corporation PRIM, has won a new industrial contract worth $27 million from a refiner. Per the deal, Primoris is likely to perform mechanical, electrical, and instrumentation work.

The project is expected to reduce emissions and increase efficiency at the refiner’s existing facilities as planned. Previously, ARB Underground has been awarded for civil work, horizontal directional drilling, interconnecting pipe lines, and installation of pigging and metering equipment for the same project. Currently, the work is anticipated to begin in fourth-quarter 2017 and is expected to close in fourth-quarter 2018.

In October 2017, ARB Underground signed a Master Service Agreement (MSA) for three years with a major utility customer valued at approximately $21 million. This deal includes carrying out natural gas main and service renewal work in Northern and Northeastern Iowa.

Primoris Services Corporation Price


Primoris Services Corporation Price | Primoris Services Corporation Quote

The ARB Industrial business unit in California completed work on a design build cogen joint venture and the large simple cycle power plant joint venture is currently on schedule. Also, it is pursuing battery storage awards similar to the large project completed last year.

We note that ARB Underground is part of the Primoris' Power, Industrial, & Engineering segment. The segment accounted for 25% of the total revenues in the third quarter and improved 51% year over year.

Meanwhile, Primoris seems to be optimistic about bidding opportunities that are expected to continue increasing its backlog. Also, the company is poised to benefit from its efforts to strengthen the sales teams, consequently leading to more consistent project wins.

Over the past year, Primoris has outperformed the industry which it belongs to. The company’s shares have gained around 15.4%, as against the industry’s loss of 1.5% in the same time frame.


Zacks Rank & Stocks to Consider

Primoris carries a Zacks Rank #4 (Sell). Better-ranked stocks in the construction sector include EMCOR Group, Inc. EME, Sterling Construction Company, Inc. STRL and MasTec, Inc. MTZ. While EMCOR and Sterling Construction sport a Zacks Rank #1 (Strong Buy), MasTec carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EMCOR has a long-term earnings growth rate of 15%. Its shares have been up 12.6% year to date.

Sterling Construction has a long-term earnings growth rate of 20%. So far this year, its shares have rallied 104.5%.

MasTec has a long-term earnings growth rate of 13%. Its shares have gained 8.8% year to date.

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