Primoris Services Corporation (NASDAQ: PRIM) and Granite Construction (NYSE:GVA) are both small-cap construction companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitabiliy, risk, dividends, valuation and earnings.
Volatility and Risk
Primoris Services Corporation has a beta of 1.58, indicating that its stock price is 58% more volatile than the S&P 500. Comparatively, Granite Construction has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.
Profitability
This table compares Primoris Services Corporation and Granite Construction’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Primoris Services Corporation | 1.49% | 8.15% | 3.56% |
| Granite Construction | 1.71% | 4.85% | 2.53% |
Dividends
Primoris Services Corporation pays an annual dividend of $0.22 per share and has a dividend yield of 0.9%. Granite Construction pays an annual dividend of $0.52 per share and has a dividend yield of 1.0%. Primoris Services Corporation pays out 35.5% of its earnings in the form of a dividend. Granite Construction pays out 48.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Primoris Services Corporation and Granite Construction, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Primoris Services Corporation | 0 | 5 | 3 | 0 | 2.38 |
| Granite Construction | 0 | 2 | 7 | 0 | 2.78 |
Primoris Services Corporation currently has a consensus target price of $25.50, indicating a potential upside of 1.31%. Granite Construction has a consensus target price of $61.25, indicating a potential upside of 23.21%. Given Granite Construction’s stronger consensus rating and higher probable upside, analysts plainly believe Granite Construction is more favorable than Primoris Services Corporation.
Institutional and Insider Ownership
70.4% of Primoris Services Corporation shares are owned by institutional investors. Comparatively, 93.8% of Granite Construction shares are owned by institutional investors. 23.1% of Primoris Services Corporation shares are owned by insiders. Comparatively, 1.3% of Granite Construction shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Earnings and Valuation
This table compares Primoris Services Corporation and Granite Construction’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Primoris Services Corporation | $2.13 billion | 0.61 | $136.03 million | $0.62 | 40.60 |
| Granite Construction | $2.54 billion | 0.78 | $127.54 million | $1.07 | 46.46 |
Primoris Services Corporation has higher revenue, but lower earnings than Granite Construction. Primoris Services Corporation is trading at a lower price-to-earnings ratio than Granite Construction, indicating that it is currently the more affordable of the two stocks.
Summary
Granite Construction beats Primoris Services Corporation on 10 of the 16 factors compared between the two stocks.
About Primoris Services Corporation
Primoris Services Corporation is a holding company. The Company holds various subsidiaries, through which it operates as a specialty contractor and infrastructure company. The Company provides a range of construction, fabrication, maintenance, replacement, water and wastewater, and engineering services to public utilities, petrochemical companies, energy companies, municipalities, state departments of transportation and other customers. It operates in three segments: the West Construction Services segment (West segment), the East Construction Services segment (East segment) and the Energy segment. The Company installs, replaces, repairs and rehabilitates natural gas, refined product, water and wastewater pipeline systems; large diameter gas and liquid pipeline facilities, and heavy civil projects, earthwork and site development.
About Granite Construction
Granite Construction Incorporated is a heavy civil contractor and construction materials producer in the United States. The Company operates through three segments: Construction, Large Project Construction and Construction Materials. The Company operates across the nation, serving both public and private sector clients. Within the public sector, it concentrates on heavy-civil infrastructure projects, including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, trenchless and underground utilities, power-related facilities, water and wastewater facilities, utilities, tunnels, dams and other infrastructure-related projects. Within the private sector, the Company offers site preparation and infrastructure services for residential development, energy development, commercial and industrial sites, and other facilities, as well as provides construction management professional services.
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