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Sterling Rallies 44% in 3 Months: Should You Buy the Stock Now?
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Key Takeaways
Sterling raised its 2025 revenue, EPS and EBITDA guidance on strong execution and visibility.
STRL's backlog rose 24% y/y to $2B, with E-Infrastructure backlog surging 44% to $1.2B.
Expansion into new markets and the CEC acquisition enhance Sterling's growth prospects.
Shares of Sterling Infrastructure, Inc. (STRL - Free Report) have risen 44.3% in the past three months, well above the Zacks Engineering – R&D Services industry’s 8.9% growth. The stock has further outperformed the broader Construction sector and the S&P 500, which have advanced 12.2% each in the same period.
The company is gaining momentum from its focus on high-margin markets, such as data centers, e-commerce distribution and manufacturing facilities. Strong demand in transportation projects and expansion into new geographies are further supporting growth. Strategic acquisitions like that of CEC Facilities Group are expected to enhance service offerings and strengthen customer relationships. A diversified portfolio and a healthy project pipeline continue to provide long-term growth prospects.
Image Source: Zacks Investment Research
The STRL stock has outperformed some other players, including AECOM (ACM - Free Report) , Fluor Corporation (FLR - Free Report) and KBR, Inc. (KBR - Free Report) . In the past three months, AECOM has rallied 16.3%, while KBR and Flour have lost 7.7% and 18.7%, respectively. Let us look at the factors driving this performance.
Margin Gains Reflect STRL’s Complex Project Mix
Sterling is seeing stronger profitability as the business mix shifts toward mission-critical and large-scale projects. These projects allow the company to capture efficiency gains and deliver greater value through execution speed. In the second quarter, the gross profit margin expanded by 400 basis points to 23.3%, while adjusted EBITDA rose 35% to $126 million.
The company expects margins to remain supported as more complex, multi-phase projects enter the pipeline, reflecting confidence in sustaining profitability improvements. For 2025, the company projects adjusted EBITDA of $438-$453 million compared with the prior mentioned $410-$432 million and suggesting a rise from the $320 million reported in 2024.
STRL’s Expanding Backlog Supports Outlook
A healthy backlog continues to support Sterling’s growth outlook, with rising demand across core markets adding to multi-year visibility. The company ended the second quarter with a total backlog of $2 billion, up 24% from the prior year. E-Infrastructure backlog grew 44% to $1.2 billion, while future-phase opportunities tied to current projects stood at about $750 million. The company highlighted that this expanded pipeline strengthens prospects for sustained growth over the coming years.
Building on this momentum, the company raised its 2025 guidance. Revenues are expected to be $2.10-$2.15 billion compared with the prior mentioned $2.05-$2.15 billion. Notably, it reported $2.12 billion in 2024. Adjusted diluted EPS is projected between $9.21 and $9.47, rising from the earlier stated $8.40-$8.90 and indicating a rise from the $6.10 achieved in 2024.
STRL’s Strong Liquidity Fuels Growth Plans
Sterling continues to maintain a strong liquidity position, which enhances flexibility for growth initiatives. The company generated $85 million in operating cash flow in the second quarter, driving its net cash position to $401 million. Cash and equivalents increased to $699.4 million at June 30, 2025, from $664.2 million at the end of 2024. Long-term debt declined to $283 million from $290 million over the same period. The company believes that this strong financial base provides support for organic expansion and selective acquisitions.
New Geographies Strengthen STRL’s Footprint
Sterling is positioning itself to capture opportunities in new geographies alongside existing customer demand. Expansion efforts are underway in Texas, where bid activity is already increasing, and planning is in progress for large projects expected in the Northwest. In the second quarter, the company confirmed that initial opportunities in Texas could materialize before the year-end. The company expects these geographic initiatives to add to long-term growth as customers advance multi-year investment plans.
On Sept. 2, 2025, STRL completed the acquisition of CEC Facilities Group, LLC, a move expected to expand its service portfolio into mission-critical mechanical and electrical contracting. The integration of CEC under the E-Infrastructure Solutions segment is set to complement Sterling’s site development expertise and enhance its ability to deliver more comprehensive end-to-end solutions.
STRL Stock Valuation Insights
Sterling’s shares are currently trading at a forward 12-month price-to-earnings (P/E) ratio of 30.22, a 35.3% premium to the Zacks Engineering - R and D Services industry average of 22.33.
Image Source: Zacks Investment Research
Furthermore, the STRL stock appears overvalued compared with peer companies, with AECOM, Fluor and KBR trading at a forward P/E of 22.27, 18.27, and 11.86, respectively.
Analysts Project Upside Despite Premium Valuation
Despite its high valuation, Sterling’s upward revisions in earnings per share (EPS) estimates highlight analysts’ confidence in the stock. STRL’s earnings estimates for 2025 and 2026 have trended upward in the past 30 days to $9.57 and $10.98 per share, respectively. The estimated figures imply year-over-year growth of 56.9% and 14.7%, respectively.
Image Source: Zacks Investment Research
Final Take on STRL Stock
Sterling has positioned itself well, with a focus on high-margin projects, a strong backlog and a solid liquidity base. Expansion into new markets, along with favorable industry tailwinds, supports its growth outlook for 2025 and beyond.
With a Zacks Rank #1 (Strong Buy) at present, STRL stands out despite trading at a premium to peers. The company’s consistent execution and upward revisions in earnings estimates suggest that it is well-placed to sustain momentum and deliver value to investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Sterling Rallies 44% in 3 Months: Should You Buy the Stock Now?
Key Takeaways
Shares of Sterling Infrastructure, Inc. (STRL - Free Report) have risen 44.3% in the past three months, well above the Zacks Engineering – R&D Services industry’s 8.9% growth. The stock has further outperformed the broader Construction sector and the S&P 500, which have advanced 12.2% each in the same period.
The company is gaining momentum from its focus on high-margin markets, such as data centers, e-commerce distribution and manufacturing facilities. Strong demand in transportation projects and expansion into new geographies are further supporting growth. Strategic acquisitions like that of CEC Facilities Group are expected to enhance service offerings and strengthen customer relationships. A diversified portfolio and a healthy project pipeline continue to provide long-term growth prospects.
Image Source: Zacks Investment Research
The STRL stock has outperformed some other players, including AECOM (ACM - Free Report) , Fluor Corporation (FLR - Free Report) and KBR, Inc. (KBR - Free Report) . In the past three months, AECOM has rallied 16.3%, while KBR and Flour have lost 7.7% and 18.7%, respectively. Let us look at the factors driving this performance.
Margin Gains Reflect STRL’s Complex Project Mix
Sterling is seeing stronger profitability as the business mix shifts toward mission-critical and large-scale projects. These projects allow the company to capture efficiency gains and deliver greater value through execution speed. In the second quarter, the gross profit margin expanded by 400 basis points to 23.3%, while adjusted EBITDA rose 35% to $126 million.
The company expects margins to remain supported as more complex, multi-phase projects enter the pipeline, reflecting confidence in sustaining profitability improvements. For 2025, the company projects adjusted EBITDA of $438-$453 million compared with the prior mentioned $410-$432 million and suggesting a rise from the $320 million reported in 2024.
STRL’s Expanding Backlog Supports Outlook
A healthy backlog continues to support Sterling’s growth outlook, with rising demand across core markets adding to multi-year visibility. The company ended the second quarter with a total backlog of $2 billion, up 24% from the prior year. E-Infrastructure backlog grew 44% to $1.2 billion, while future-phase opportunities tied to current projects stood at about $750 million. The company highlighted that this expanded pipeline strengthens prospects for sustained growth over the coming years.
Building on this momentum, the company raised its 2025 guidance. Revenues are expected to be $2.10-$2.15 billion compared with the prior mentioned $2.05-$2.15 billion. Notably, it reported $2.12 billion in 2024. Adjusted diluted EPS is projected between $9.21 and $9.47, rising from the earlier stated $8.40-$8.90 and indicating a rise from the $6.10 achieved in 2024.
STRL’s Strong Liquidity Fuels Growth Plans
Sterling continues to maintain a strong liquidity position, which enhances flexibility for growth initiatives. The company generated $85 million in operating cash flow in the second quarter, driving its net cash position to $401 million. Cash and equivalents increased to $699.4 million at June 30, 2025, from $664.2 million at the end of 2024. Long-term debt declined to $283 million from $290 million over the same period. The company believes that this strong financial base provides support for organic expansion and selective acquisitions.
New Geographies Strengthen STRL’s Footprint
Sterling is positioning itself to capture opportunities in new geographies alongside existing customer demand. Expansion efforts are underway in Texas, where bid activity is already increasing, and planning is in progress for large projects expected in the Northwest. In the second quarter, the company confirmed that initial opportunities in Texas could materialize before the year-end. The company expects these geographic initiatives to add to long-term growth as customers advance multi-year investment plans.
On Sept. 2, 2025, STRL completed the acquisition of CEC Facilities Group, LLC, a move expected to expand its service portfolio into mission-critical mechanical and electrical contracting. The integration of CEC under the E-Infrastructure Solutions segment is set to complement Sterling’s site development expertise and enhance its ability to deliver more comprehensive end-to-end solutions.
STRL Stock Valuation Insights
Sterling’s shares are currently trading at a forward 12-month price-to-earnings (P/E) ratio of 30.22, a 35.3% premium to the Zacks Engineering - R and D Services industry average of 22.33.
Image Source: Zacks Investment Research
Furthermore, the STRL stock appears overvalued compared with peer companies, with AECOM, Fluor and KBR trading at a forward P/E of 22.27, 18.27, and 11.86, respectively.
Analysts Project Upside Despite Premium Valuation
Despite its high valuation, Sterling’s upward revisions in earnings per share (EPS) estimates highlight analysts’ confidence in the stock. STRL’s earnings estimates for 2025 and 2026 have trended upward in the past 30 days to $9.57 and $10.98 per share, respectively. The estimated figures imply year-over-year growth of 56.9% and 14.7%, respectively.
Image Source: Zacks Investment Research
Final Take on STRL Stock
Sterling has positioned itself well, with a focus on high-margin projects, a strong backlog and a solid liquidity base. Expansion into new markets, along with favorable industry tailwinds, supports its growth outlook for 2025 and beyond.
With a Zacks Rank #1 (Strong Buy) at present, STRL stands out despite trading at a premium to peers. The company’s consistent execution and upward revisions in earnings estimates suggest that it is well-placed to sustain momentum and deliver value to investors. You can see the complete list of today’s Zacks #1 Rank stocks here.