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What: Shares of energy and industrial specialty contractor Primoris Services Corp dropped as much as 20% today after announcing earnings and an acquisition.
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So what: Fourth-quarter revenue was down 9.3% to $487.6 million and net income dropped 60% to $8.9 million, or $0.17 per share. Analysts were expecting revenue of $623.0 million and earnings of $0.49 per share so you can see why investors would be disappointed today.
Primoris also said it closed the acquisition of Aevenia, a Midwest electrical and telecom infrastructure company. The deal was valued at $23 million and last year Aevenia generated EBITDA of $5.9 million.
Now what: Energy revenue actually held up well in the fourth quarter and it was industrial weakness in the west that resulted in weak earnings. One positive point is that total backlog did increase from $1.94 billion a year ago to $1.99 billion at the end of 2014.
Results in any construction business are going to ebb and flow, so I wouldn't get too concerned over a single quarter. If you look at 2014 as a whole, earnings were $1.22 per share, which makes the stock's P/E ratio just over 14. That's a decent value for long-term investors and I think long-term there will be growth in infrastructure spending for oil, gas, solar, electricity, and industrials, which plays into Primoris' hands.
The article Why Shares of Primoris Services Corp Plunged 20% Today originally appeared on Fool.com.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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