Back to top

Image: Bigstock

Sterling Stock Soars 159% in 6 Months: Should You Buy the Surge Now?

Read MoreHide Full Article

Key Takeaways

  • Sterling shares soared 159.1% in six months, driven by infrastructure spending and rate-cut tailwinds.
  • E-Infrastructure revenues rose 24.2% in H1 2025, with 18-20% growth and margin gains expected this year.
  • The CEC Facilities acquisition expands STRL's electrical and mechanical capabilities across new markets.

Sterling Infrastructure, Inc. (STRL - Free Report) surged 159.1% in the past six months, significantly outperforming the Zacks Engineering - R and D Services industry, the broader Zacks Construction sector and the S&P 500 index.

This Texas-based infrastructure services provider has been gaining robust momentum since the start of 2025, which appears to be continuing to this day. Given its nature of business, the company is growing on the back of increased infrastructure spending across the United States, with the recent Fed rate cut catalyzing the entire process. Besides, STRL’s in-house organic and inorganic strategies are also offering additional support to its growing prospects amid the market tailwinds.

Zacks Investment Research
Image Source: Zacks Investment Research

Let us dive deeper into understanding the factors that are keeping Sterling on the move amid market risks.

Shifts Toward Data Center Infrastructure

The rise in demand for AI-based solutions, data creation, cloud migration and the shift toward sustainability and efficient work processes are creating a seamless and never-ending demand for data center projects. This demand is being fueled by the increased public infrastructure spending initiatives undertaken at the federal and state levels in the United States, thus benefiting infrastructure solutions provider companies like Sterling.

In its recent quarterly report, STRL highlighted that it is witnessing its customers across several geographies formulating multi-year capital deployment plans related to data center projects, thereby supporting its revenue stream and profitability prospects. The company operates these projects through its E-Infrastructure Solutions (contributing 51% to STRL’s total revenues) segment, which, amid the favorable market backdrop, witnessed year-over-year revenue growth of 24.2% in the first six months of 2025. The company anticipates revenue growth of 18-20% year over year in 2025 for this segment, with the adjusted operating profit margin expected to be in the mid-to-high 20% range compared with 23.7% in 2024.

Market Tailwinds Offering a Cushion

On Sept. 17, 2025, the Federal Reserve slashed the interest rate by 25 basis points, pulling down the benchmark between 4.0% and 4.25%. The start of 2025 was rough for the United States, with a new administration in power, to discussions over a newly formulated global tariff regime. However, things started normalizing by the second half of the year, and given the market trends, the rate cut came into existence, with optimism about two additional cuts in the remainder of 2025.

Moreover, on Sept. 19, 2025, the Trump administration announced that it is seeking opportunities to invest the $550 billion Japan tariff investment fund for the development of factories for semiconductors, pharmaceuticals and other strategic sectors. This initiative is expected to stimulate Sterling’s prospects across its e-infrastructure solutions, which are already boosted by increased data center demand trends.

Sterling’s Accretive Buyout Strategy

On June 16, 2025, Sterling entered into a definitive agreement to acquire CEC Facilities Group, LLC, under its E-Infrastructure Solutions segment, which was closed on Sept. 2. CEC Facilities is a Texas-based specialty electrical and mechanical contractor, which is expected to amplify the capabilities of STRL across mission-critical electrical and mechanical services across existing and new markets, like Texas. Sterling believes that this combined service portfolio will be able to offer higher value, end-to-end E-Infrastructure solutions to its customers, thus ensuring higher value and better revenue visibility in the upcoming period.

Earnings Estimates Trend of STRL

For 2025 and 2026, STRL’s earnings estimates have trended upward in the past 60 days to $8.90 and $9.74 per share, respectively. The revised estimated figures reflect 56.9% and 14.7% year-over-year growth, respectively.

Zacks Investment Research
Image Source: Zacks Investment Research

Owing to the favorable fundamentals, the analysts’ optimism about STRL stock is expected to have been elevated, leading to an upward revision in the estimates.

Sterling’s Competitive Position

Sterling has been sharpening its competitive position in mission-critical infrastructure, especially in a market with competitors like MasTec, Inc. (MTZ - Free Report) , Primoris Services Corporation (PRIM - Free Report) and EMCOR Group, Inc. (EME - Free Report) .

MasTec is a large diversified infrastructure and utility contractor that designs, builds and maintains power delivery, communications, pipelines and renewable energy assets. Its scale and breadth make it a dominant bidder on large power and telecom programs. On the other hand, Primoris operates as a specialty contractor delivering pipeline, transmission & distribution, power generation and heavy civil services, with capabilities in engineering, maintenance and EPC work across utilities and energy markets. Lastly, EMCOR is a mechanical and electrical construction and facilities services leader, offering building systems, energy infrastructure and long-term operations and maintenance for data centers, commercial and industrial clients.

Compared with MasTec, Primoris and EMCOR, Sterling’s edge lies in strategic focus on alternative delivery, aviation and e-infrastructure, alongside a leaner subsidiary model that can win regional, higher-margin mission-critical contracts. However, Sterling lacks MasTec’s national scale, Primoris’ pipeline specialization and EMCOR’s facilities services footprint. It can compete on speed, local expertise and integrated delivery, but will still face pricing pressure from these three market peers.

STRL’s Premium Valuation

Sterling stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 32.73, as evidenced by the chart below.

Zacks Investment Research
Image Source: Zacks Investment Research

The overvaluation of the stock compared with its industry peers indicates its strong potential in the market, given the favorable trends backing it up.

What Should be Your Take on STRL Stock?

As discussed above, Sterling is benefiting from accelerating U.S. infrastructure spending amid a favorable backdrop from the recent Fed rate cut. The rising data center, AI and cloud infrastructure demand is already pulling up STRL’s prospects in the long term, but with the recent acquisition of CEC Facilities Group, the company’s positioning in the mission-critical electrical and mechanical services sector has ramped up.

Moreover, an upward earnings estimate revision and outperformance to peers are expected to induce investors’ optimism, underscoring Sterling’s robust growth trajectory, alongside a premium valuation.

Analysts’ optimism regarding STRL stock is reflected in all four recommendations, pointing to a "Strong Buy”, representing 100% of all recommendations.

Zacks Investment Research
Image Source: Zacks Investment Research

Overall, based on the favorable trends, this current Zacks Rank #1 (Strong Buy) stock makes an appealing buy for investors seeking exposure to U.S. infrastructure growth. You can see the complete list of today’s Zacks #1 Rank stocks here.

Published in