Can Primoris Sustain Renewables Momentum Amid Shifting Award Timing?

Core Insights - Primoris Services Corporation (PRIM) is currently facing challenges in its Renewables business due to shifting project timelines, customer-driven delays, and evolving supply-chain decisions, which are affecting the pace of award activity [1] - Despite these challenges, long-term demand for utility-scale solar and battery storage remains strong, and the company's ability to maintain momentum in Renewables will depend on balancing accelerated execution with slower bookings [1] Financial Performance - In Q3 2025, the Energy segment grew by $475 million, or 47% year-over-year, primarily driven by increased activity in renewables and industrial sectors [2] - Revenues from Renewables exceeded internal expectations by over $400 million for the quarter and more than $900 million year-to-date, leading to an upward revision of the full-year revenue expectation to approximately $3 billion from a prior estimate of $2.6 billion [2] Backlog and Future Outlook - The exceptional performance in revenue has resulted in a reduction of backlog, attributed to faster-than-expected revenue burn and project signings being delayed by one or two quarters [3] - The company is optimistic about securing several high-value awards in the upcoming quarters, which could support strong performance in 2026 [3] Growth Projections - The company cautioned that Renewables revenue growth heading into 2026 is expected to be more modest, potentially lower by a couple of hundred million as project timing normalizes [4] - Sustaining momentum will depend on the speed of new bookings replenishing the backlog while project execution continues to exceed expectations [4] Stock Performance - Primoris shares have increased by 75.5% over the past six months, outperforming the Zacks Building Products - Heavy Construction industry, the broader Zacks Construction sector, and the S&P 500 index [5] - Competitors such as MasTec, Inc. and Jacobs Solutions Inc. have seen their shares rise by 34.9% and 7.8%, respectively, in the same period [8] Valuation and Earnings Estimates - PRIM stock is currently trading at a premium compared to industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 22.9 [9] - Earnings estimates for 2025 and 2026 remain unchanged at $5.08 and $5.55 per share, indicating year-over-year growth of 31.3% and 9.3%, respectively [11]