Sterling vs. Granite: Which Infrastructure Stock is the Smarter Bet?

Sraddha Singha October 16, 2025

STRL GVA

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Key Takeaways

Sterling's E-Infrastructure Solutions backlog rose 44% to $1.2B, led by data center demand.
Granite's CAP reached a record $6.1B, boosted by acquisitions like Warren Paving and Papich.
STRL shows faster earnings growth and higher ROE, while GVA trades at a discounted valuation.

The infrastructure market in the United States is in full swing, given the several federal and state funding initiatives targeting the enhancement of public infrastructure alongside ensuring sustainability. These market trends are proving favorable for companies like Sterling Infrastructure, Inc. (STRL - Free Report) and Granite Construction Incorporated (GVA - Free Report) , which operate in the U.S. infrastructure or construction sector, competing for public works, transportation and civil engineering contracts.

Additionally, the recent Fed rate cut, exercised on Sept. 17, 2025, is expected to bolster this favorable market trend further. The Federal Reserve lowered its interest rate benchmark by 0.25 percentage points to a range of 4-4.25%, leaving room for optimism about two more rate cuts in the remainder of 2025. Lower financing costs are expected to spur investments in large-scale projects across markets served by the companies mentioned above.

Sterling is currently focusing on large mission-critical projects, including data centers and manufacturing, to balance out housing market weakness and enhance its revenue visibility. On the other hand, Granite is invested in executing its strategic plan through several organic and inorganic moves to ensure margin expansion and business scale.

Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for Sterling Stock

This Texas-based infrastructure services provider, with a market capitalization of about $11 billion, is benefiting from its focus shift toward large mission-critical projects from the residential projects due to the ongoing housing market weakness in the country. 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. Catalyzed by the ramped-up public infrastructure spending initiatives and Fed rate cut optimism, Sterling is witnessing a robust demand environment for its services.

The company operates mission-critical projects through its E-Infrastructure Solutions (contributing 51% to STRL’s total revenues) segment, which witnessed year-over-year revenue growth of 24.2% in the first six months of 2025. As of June 30, 2025, E-Infrastructure Solutions’ backlog was up year over year by 44% to $1.2 billion, with prime contribution from data centers and manufacturing. Sterling expects the E-Infrastructure Solutions segment’s revenue growth to be between 18% and 20% year over year in 2025, with the adjusted operating profit margin expected to be in the mid-to-high 20% range compared with 23.7% in 2024.

Besides, STRL’s recent acquisition of CEC Facilities Group, LLC (completed on Sept. 2, 2025) marked another enhancement of its service portfolio. This Texas-based specialty electrical and mechanical contractor is expected to amplify the capabilities of Sterling across mission-critical electrical and mechanical services across existing and new markets, like Texas.

The Case for Granite Stock

This California-based infrastructure construction and materials provider, with a market capitalization of approximately $4.7 billion, is gaining from the benefits realized upon executing its strategic plan. The strategic plan highlights the company’s primary aim in driving construction margins and enhancing organic growth through correct project choices in key markets while standardizing execution practices across its business. Moreover, it is aiming to maximize the benefits from its vertically integrated business model, and to do so, GVA has revamped its capital investment direction, shifting its focus toward its Materials business.

During the first six months of 2025, revenues across Granite’s Construction and Materials segments grew year over year by 2.6% and 13.2%, respectively. Given a robust bidding environment across public and private markets, especially across Nevada, Utah, California and Alaska, the Committed and Awarded Projects (CAP) reached a new high of $6.1 billion, as of June 30, 2025, up from $5.3 billion as of the comparable period in 2024.

Besides market tailwinds, GVA’s inorganic initiatives are favorably pulling up its prospects in a dicey macro environment. During the first half of 2025, the company’s financial performance was positively impacted by the Dickerson & Bowen, Inc. acquisition, which was completed in August 2024. Moreover, in 2025, Granite reported a few notable buyouts, including the acquisition of two companies, Warren Paving and Papich Construction. These additions strengthen its vertically-integrated home markets and are expected to contribute approximately $425 million in revenues annually, with an expected adjusted EBITDA margin of about 18%. On Oct. 6, 2025, GVA acquired Cinderlite Trucking Corp., a leading construction materials, landscape supply, and transportation company in Nevada.

Although in-house and market talent are promising, Granite is susceptible to project execution risks, payment delays, geopolitical issues and other macro challenges.

Stock Performance & Valuation

As witnessed from the chart below, in the past three months, Sterling’s share price performance stands above Granite’s and the broader Construction sector.