Investors in Primoris Services Corporation (NYSE:PRIM) had a good week, as its shares rose 6.2% to close at US$50.24 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$1.4b were what the analysts expected, Primoris Services surprised by delivering a (statutory) profit of US$0.35 per share, an impressive 347% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Primoris Services' five analysts are forecasting 2024 revenues to be US$5.92b, approximately in line with the last 12 months. Statutory earnings per share are predicted to rise 2.1% to US$2.74. Before this earnings report, the analysts had been forecasting revenues of US$6.08b and earnings per share (EPS) of US$2.70 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The consensus has reconfirmed its price target of US$56.60, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Primoris Services' market value. 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$63.00 per share, while the most pessimistic values it at US$49.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Primoris Services' past performance and to peers in the same industry. We would highlight that Primoris Services' revenue growth is expected to slow, with the forecast 1.1% annualised growth rate until the end of 2024 being well below the historical 13% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Primoris Services.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. The consensus price target held steady at US$56.60, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Primoris Services going out to 2026, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Primoris Services that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.