We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Sterling Gains 65% in 3 Months: Should Investors Buy the Stock Now?
Read MoreHide Full Article
Key Takeaways
STRL jumped 65.4% in three months, outperforming its peers and the broader Construction sector.
E-Infrastructure revenue rose 18% in Q1, driven by strong data center demand and project backlog strength.
Backlog hit $2.1B with $1.2B from E-Infrastructure, plus a $0.75B pipeline of future phase work.
Shares of Sterling Infrastructure, Inc. (STRL - Free Report) have gained 65.4% over the past three months, outperforming 24.8% growth in the Zacks Engineering - R and D Services industry. The stock has also surpassed the broader Construction sector's increase of 4.2% and the S&P 500 Index’s 3.1% rise during the same period.
This Texas-based e-infrastructure solutions, building solutions and transportation solutions provider is gaining from the E-Infrastructure segment’s stability, strong backlog, inorganic growth efforts and steady bid activity in key transportation markets. However, ongoing market volatility, driven by trade policy uncertainties, inflationary pressures and shifting consumer sentiment, is concerning for its prospects.
STRL Stock’s Past 3 Months’ Price Performance
Image Source: Zacks Investment Research
The STRL stock has outperformed some other players in the past three months, including AECOM (ACM - Free Report) , Fluor Corporation (FLR - Free Report) and KBR, Inc. (KBR - Free Report) . In the said time frame, AECOM, Flour and KBR have gained 14%, 18.9% and 0.9%, respectively.
Technical indicators suggest continued strong performance for Sterling. From the graphical representation given below, it can be observed that STRL stock is trading above both 50 and 200-day simple moving averages, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in its financial health and prospects.
Let us take a closer look at the factors driving Sterling’s recent gain and what this may signal for the stock going forward.
E-Infrastructure Segment Drives Continued Momentum
Sterling’s E-Infrastructure segment, contributing 44% of total revenues in 2024, remains the company’s largest and most profitable business line. In the first quarter of 2025, revenues in this segment rose 18% over the prior year. The upside was mainly driven by continued demand in the data center market, which increased around 60%, along with its strategic shift toward large mission-critical projects. Mission-critical work, including data centers, represented more than 65% of the segment’s backlog, indicating sustained demand visibility.
Moving forward, the company expects data center demand to remain strong as customers are planning multi-year capital investments and looking to work with reliable partners. For 2025, Sterling expects E-Infrastructure revenue to grow in the mid-to-high teens and adjusted operating profit margins to remain in the mid-20% range.
Strong Backlog Supports Future Growth
The company maintains a solid backlog, providing clear visibility into upcoming work. At the end of the first quarter, the backlog stood at $2.1 billion, a 17% increase year over year on a pro forma basis. The upside was backed by a 27% rise in the E-Infrastructure Solutions backlog, which reached $1.2 billion in the first quarter.
The company expects this strong backlog to support steady earnings growth over the next few years. The company’s multiyear prospect is supported by growth in its pipeline of future phase opportunities linked to current projects. The company achieved $0.75 billion in future phase work in the first quarter of 2025. Including both signed backlog and expected future work, the company now has a line of sight to nearly $2 billion in E-Infrastructure projects.
Inorganic Growth Drives Business Expansion
The company is pursuing growth through acquisitions to strengthen its market position. In the first quarter of 2025, the company completed the acquisition of Drake Concrete, a residential concrete provider in the Dallas-Fort Worth area, for $25 million. This deal broadens Sterling’s geographic reach and customer base. Drake Concrete is expected to add $55 million in revenues and $6.5 million in EBITDA in 2025. Furthermore, the acquisition is expected to support slight revenue growth overall in the Building Solutions segment.
Going forward, Sterling continues to focus on finding suitable acquisitions to support growth and improve service offerings. The e-infrastructure sector remains a key area for mergers and acquisitions, with opportunities also being explored in the Building Solutions segment.
Transportation Segment Positioned for Profitable Growth
The company expects stable progress in its Transportation business, supported by a strong backlog and steady bid activity as it enters the second half of the federal funding cycle. Strategic downsizing of the low-bid heavy highway business in Texas is moderating revenue and backlog, but is expected to enhance margins.
For 2025, the company anticipates continued growth in its core Rocky Mountain and Arizona markets. It now expects Transportation Solutions revenue growth in the mid-single digits on a pro forma basis in 2025.
Upward Estimate Revisions for Sterling
Image Source: Zacks Investment Research
Wall Street analysts remain optimistic about STRL’s earnings potential. Over the past 30 days, earnings estimates for 2025 have been revised upward to $8.45 from $8.21, as shown above. The estimated figure indicates growth of 38.5% from that reported a year ago. On the other hand, stocks like AECOM, Flour and KBR’s earnings in the current year are likely to witness an increase of 13.9%, 8.2 % and 15.9%, respectively, year over year.
STRL Stock Trades at a Premium
From a valuation standpoint, the company is currently trading at a premium relative to its industry and historical metrics, with the forward 12-month price-to-earnings (P/E) ratio sitting above the five-year average.
Image Source: Zacks Investment Research
Furthermore, STRL also trades higher than some of its industry peers, such as AECOM, Fluor and KBR, which trade at 19.96X, 16.35X and 12.9X, respectively.
Conclusion
Strong demand in the E-Infrastructure segment, a robust backlog, and recent acquisitions support Sterling’s growth prospects. The company expects steady revenue and profit improvements supported by these factors. As Sterling currently carries a Zacks Rank #2 (Buy), upward revisions in earnings estimates reflect growing investor confidence. Based on this, investors may consider this stock attractive. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Sterling Gains 65% in 3 Months: Should Investors Buy the Stock Now?
Key Takeaways
Shares of Sterling Infrastructure, Inc. (STRL - Free Report) have gained 65.4% over the past three months, outperforming 24.8% growth in the Zacks Engineering - R and D Services industry. The stock has also surpassed the broader Construction sector's increase of 4.2% and the S&P 500 Index’s 3.1% rise during the same period.
This Texas-based e-infrastructure solutions, building solutions and transportation solutions provider is gaining from the E-Infrastructure segment’s stability, strong backlog, inorganic growth efforts and steady bid activity in key transportation markets. However, ongoing market volatility, driven by trade policy uncertainties, inflationary pressures and shifting consumer sentiment, is concerning for its prospects.
STRL Stock’s Past 3 Months’ Price Performance
Image Source: Zacks Investment Research
The STRL stock has outperformed some other players in the past three months, including AECOM (ACM - Free Report) , Fluor Corporation (FLR - Free Report) and KBR, Inc. (KBR - Free Report) . In the said time frame, AECOM, Flour and KBR have gained 14%, 18.9% and 0.9%, respectively.
STRL Stock Trades Above 50 & 200-Day Moving Averages
Image Source: Zacks Investment Research
Technical indicators suggest continued strong performance for Sterling. From the graphical representation given below, it can be observed that STRL stock is trading above both 50 and 200-day simple moving averages, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in its financial health and prospects.
Let us take a closer look at the factors driving Sterling’s recent gain and what this may signal for the stock going forward.
E-Infrastructure Segment Drives Continued Momentum
Sterling’s E-Infrastructure segment, contributing 44% of total revenues in 2024, remains the company’s largest and most profitable business line. In the first quarter of 2025, revenues in this segment rose 18% over the prior year. The upside was mainly driven by continued demand in the data center market, which increased around 60%, along with its strategic shift toward large mission-critical projects. Mission-critical work, including data centers, represented more than 65% of the segment’s backlog, indicating sustained demand visibility.
Moving forward, the company expects data center demand to remain strong as customers are planning multi-year capital investments and looking to work with reliable partners. For 2025, Sterling expects E-Infrastructure revenue to grow in the mid-to-high teens and adjusted operating profit margins to remain in the mid-20% range.
Strong Backlog Supports Future Growth
The company maintains a solid backlog, providing clear visibility into upcoming work. At the end of the first quarter, the backlog stood at $2.1 billion, a 17% increase year over year on a pro forma basis. The upside was backed by a 27% rise in the E-Infrastructure Solutions backlog, which reached $1.2 billion in the first quarter.
The company expects this strong backlog to support steady earnings growth over the next few years. The company’s multiyear prospect is supported by growth in its pipeline of future phase opportunities linked to current projects. The company achieved $0.75 billion in future phase work in the first quarter of 2025. Including both signed backlog and expected future work, the company now has a line of sight to nearly $2 billion in E-Infrastructure projects.
Inorganic Growth Drives Business Expansion
The company is pursuing growth through acquisitions to strengthen its market position. In the first quarter of 2025, the company completed the acquisition of Drake Concrete, a residential concrete provider in the Dallas-Fort Worth area, for $25 million. This deal broadens Sterling’s geographic reach and customer base. Drake Concrete is expected to add $55 million in revenues and $6.5 million in EBITDA in 2025. Furthermore, the acquisition is expected to support slight revenue growth overall in the Building Solutions segment.
Going forward, Sterling continues to focus on finding suitable acquisitions to support growth and improve service offerings. The e-infrastructure sector remains a key area for mergers and acquisitions, with opportunities also being explored in the Building Solutions segment.
Transportation Segment Positioned for Profitable Growth
The company expects stable progress in its Transportation business, supported by a strong backlog and steady bid activity as it enters the second half of the federal funding cycle. Strategic downsizing of the low-bid heavy highway business in Texas is moderating revenue and backlog, but is expected to enhance margins.
For 2025, the company anticipates continued growth in its core Rocky Mountain and Arizona markets. It now expects Transportation Solutions revenue growth in the mid-single digits on a pro forma basis in 2025.
Upward Estimate Revisions for Sterling
Image Source: Zacks Investment Research
Wall Street analysts remain optimistic about STRL’s earnings potential. Over the past 30 days, earnings estimates for 2025 have been revised upward to $8.45 from $8.21, as shown above. The estimated figure indicates growth of 38.5% from that reported a year ago. On the other hand, stocks like AECOM, Flour and KBR’s earnings in the current year are likely to witness an increase of 13.9%, 8.2 % and 15.9%, respectively, year over year.
STRL Stock Trades at a Premium
From a valuation standpoint, the company is currently trading at a premium relative to its industry and historical metrics, with the forward 12-month price-to-earnings (P/E) ratio sitting above the five-year average.
Image Source: Zacks Investment Research
Furthermore, STRL also trades higher than some of its industry peers, such as AECOM, Fluor and KBR, which trade at 19.96X, 16.35X and 12.9X, respectively.
Conclusion
Strong demand in the E-Infrastructure segment, a robust backlog, and recent acquisitions support Sterling’s growth prospects. The company expects steady revenue and profit improvements supported by these factors. As Sterling currently carries a Zacks Rank #2 (Buy), upward revisions in earnings estimates reflect growing investor confidence. Based on this, investors may consider this stock attractive. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.