Shareholders of Primoris would probably like to forget the past six months even happened. The stock dropped 50.1% and now trades at $76.37. This might have investors contemplating their next move.
Is now the time to buy Primoris, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is Primoris Not Exciting?
Even with the cheaper entry price, we don’t have much confidence in Primoris. Here are three reasons you should be careful with PRIM, plus one stock we’d rather own.
1. Low Gross Margin Reveals Weak Structural Profitability
Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.
Primoris has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 10.3% gross margin over the last five years. That means Primoris paid its suppliers a lot of money ($89.69 for every $100 in revenue) to run its business.
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Primoris’s EPS grew at an unimpressive 6.5% compounded annual growth rate over the last five years, lower than its 15.5% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
3. Mediocre Free Cash Flow Margin Limits Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Primoris has shown poor cash profitability relative to peers over the last five years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 2.2%, below what we’d expect for an industrials business.
Final Judgment
Primoris isn’t a terrible business, but it doesn’t pass our bar. After the recent drawdown, the stock trades at 19.6× forward P/E (or $76.37 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We’re fairly confident there are better stocks to buy right now. We’d recommend looking at the most dominant software business in the world.
Stocks We Like More Than Primoris
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
