Construction and engineering company PRIMORIS SERVICES CORP (NYSE:PRIM) has been identified by a stock screening method based on Louis Navellier's growth investing strategy, detailed in his book "The Little Book That Makes You Rich." This process finds companies with solid and quickening fundamental growth in several important financial areas. The method is based on the idea that stocks with better earnings revisions, positive surprises, and strong sales and earnings growth are set for possible market gains.
Meeting the Growth Criteria
The screening method uses eight specific rules to find high-growth companies. PRIMORIS SERVICES CORP shows clear agreement with these rules based on its latest financial results.
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Positive Earnings Revisions: Analyst outlook has gotten better, with the EPS estimate for the next quarter raised by 5.21% in the last three months. This is a key sign in Navellier's method, as upward revisions can mean analysts have gotten positive internal company information, hinting that future earnings could be better than earlier thought.
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Positive Earnings Surprises: The company has a flawless history of beating predictions, having surpassed EPS estimates in all of the last four quarterly announcements. The average beat was a large 45.18%. Steady positive surprises can push the market to value a stock higher as it shows a company's skill in regularly doing better than cautious estimates.
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Increasing Sales Growth: PRIMORIS displays energetic top-line growth.
- Year-over-year revenue growth is 21.45%.
- Quarter-over-quarter revenue growth is even more pronounced at 32.10%. This quickening sales growth is a sign of a genuine growth company, pointing to rising demand for its services.
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Expanding Operating Margin: The company's operating margin has increased by 13.57% over the last year. This is a crucial indicator of better efficiency, showing that PRIMORIS is not only growing sales but is also turning more of that revenue into profit, a central part of the strategy.
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Strong Cash Flow: The firm's free cash flow has surged, growing by a notable 537.74% over the past year. Solid and increasing cash flow gives a company the financial freedom to fund its own expansion, lower debt, or give money back to shareholders without needing outside funding.
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Earnings Growth: The bottom-line growth is also notable.
- Year-over-year EPS growth is 65.79%.
- Quarter-over-quarter EPS growth is 54.10%. This shows that the solid sales growth is effectively reaching net income.
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Positive Earnings Momentum: The present quarter-over-quarter EPS growth of 54.10% is much greater than the growth rate from the same quarter a year before, which was 37.08%. This quickening in the rate of earnings growth is a strong sign of positive momentum that the strategy aims to find.
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High Return on Equity: PRIMORIS provides a solid Return on Equity of 17.03%. This number is above the screen's lowest requirement of 10% and shows that the company is effectively using shareholder money to create profits.
Fundamental Analysis Overview
A look at the full fundamental analysis report for PRIM gives a wider view of the stock's characteristics. The report gives PRIM an overall fundamental score of 6 out of 10, describing it as a company with neutral scores for profitability and financial health, but one that is "showing excellent growth while it is valued at reasonable prices."
Important points from the report feature a solid growth score of 7, supported by the potent historical EPS and revenue growth numbers. The valuation score of 6 implies the stock is not extremely priced, particularly compared to its industry counterparts, with several price multiples suggesting a "rather cheap valuation." The company's financial health is considered sound, with a good debt situation and solid solvency numbers. This high-level review indicates that the rapid growth found by the screen is not happening by risking the company's financial steadiness.
A Starting Point for Further Research
The use of Louis Navellier's growth rules has effectively found PRIMORIS SERVICES CORP as a company displaying many of the fundamental traits linked with high-growth stocks. Its solid results across earnings revisions, surprises, sales, margins, and cash flow make it an interesting candidate for investors using this method.
For investors wanting to find other companies that meet this strict growth screen, the predefined strategy is ready to use and adjust. You can access the "Little Book" screen here to view all current results.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented should not be used as the sole basis for making any investment decision. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
