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Should You Buy, Hold or Sell Sterling Stock Post Q3 Earnings?
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Key Takeaways
Sterling's Q3 earnings jumped 58% to $3.48 per share, with revenues up 32% to $689 million.
Data center demand and a 64% backlog rise strengthened growth prospects.
Strong backlog and project pipeline signal continued growth momentum into 2025.
Sterling Infrastructure, Inc. (STRL - Free Report) reported third-quarter 2025 results on Nov. 3, with both earnings and revenues exceeding the Zacks Consensus Estimate by 24.7% and 12.5%, respectively. The company also delivered strong year-over-year growth across key metrics.
Digging Deeper Into Sterling’s Q3 Results
Adjusted diluted earnings per share stood at $3.48, up 58% from the prior-year quarter, while revenues of $689 million increased 32%. The growth was led by a 58% rise in the E-Infrastructure Solutions segment, including 42% organic growth, and a 10% increase in Transportation Solutions. Gross margin expanded 280 basis points to 24.7%, driven by the continued shift toward higher-margin, mission-critical projects such as data centers. Supported by strong revenues and margin gains, adjusted EBITDA grew 47% year over year to $156 million and operating cash flow remained solid at $84 million in the quarter.
STRL Stock Outperforms Peers, Industry & Market
Image Source: Zacks Investment Research
Shares of Sterling have gained 32.7% in the past three months compared with the Zacks Engineering - R and D Services industry and the S&P 500’s growth of 3.8% and 8.9%, respectively. STRL stock has also outperformed the broader Construction sector's 1% rise during the same period.
The 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 and Flour have rallied 9.6% and 9.4%, respectively, while KBR has lost 14.1%.
Sterling’s third-quarter results underscored strong execution and momentum. Let us look at what fueled the performance.
Data Center Strength Drives Sterling’s Infrastructure Growth
Sterling’s E-Infrastructure business continued to perform strongly, supported by rising demand for large and complex projects. The company’s strategic focus on mission-critical work, including data centers, e-commerce distribution and manufacturing facilities, has strengthened its position in high-growth markets. Efficient execution and strong project management capabilities have further enhanced its performance in this segment.
During the quarter, the data-center market remained the key growth driver, with revenues from this area rising more than 125% year over year. The company continued to benefit from its ability to complete large-scale site development projects on or ahead of schedule, which remains highly valued by clients.
Looking ahead, Sterling expects strong momentum in data centers to continue into 2026, supported by a solid pipeline of new projects and healthy customer demand. For 2025, the company anticipates E-Infrastructure revenue growth of around 30% or higher on an organic basis and close to 50% including the CEC acquisition, reflecting the continued expansion of its service capabilities and market reach.
Strong Backlog Strengthens Sterling’s Growth Outlook
Sterling ended the third quarter with a strong backlog, supported by healthy project wins and strong demand across key end markets. The company’s backlog reached $2.6 billion, up 64% from the prior year, highlighting solid visibility for the coming quarters. E-Infrastructure Solutions accounted for $1.8 billion of total backlog, up 97% year over year, underscoring the strength of Sterling’s positioning in high-growth infrastructure segments. Including unsigned awards and future phase opportunities, total potential work now exceeds $4 billion. This strong position provides a solid foundation for continued growth and reflects customer confidence in Sterling’s capabilities and execution.
Looking ahead, the company remains optimistic about its multi-year growth prospects, backed by robust customer pipelines and expanding geographic reach. Clients are planning long-term capital deployments, with Sterling aligning closely to support these initiatives. The company expects another record year in 2025, raising full-year guidance for revenues and earnings, reinforcing its confidence in sustained growth momentum.
Sterling’s Transportation Solutions business continued to show steady progress, supported by strong demand and disciplined project selection. The company focused on high-value, design-build, aviation and rail projects, which contributed to stronger margins and improved profitability. In the third quarter, the segment’s adjusted operating profit increased 40% year over year. A continued shift toward complex, higher-margin work helped balance performance across markets and enhance overall efficiency.
Backlog for the segment increased 23% to $733 million, supported by healthy bidding activity and multi-year visibility under federal infrastructure funding. The ongoing wind-down of low-bid highway operations in Texas continues to enhance margins, positioning the business for stronger profitability in 2026. For 2025, STRL expects adjusted operating profit margins in the range of 13.5% to 14%, up from 9.6% in 2024, reflecting continued progress toward a higher-return portfolio.
Earnings Estimates Trend of STRL
For 2025 and 2026, STRL’s earnings estimates have remained unchanged in the past 60 days at $9.57 and $10.98 per share, respectively. The revised estimated figures indicate 56.9% and 14.7% year-over-year growth, respectively.
Image Source: Zacks Investment Research
Conversely, AECOM and KBR’s earnings in the current year are likely to witness year-over-year increases of 15.9% and 13.5%, respectively, while Fluor’s earnings are expected to decline 12.5%.
Taking a Look at Sterling Stock’s Valuation
From a valuation standpoint, the company is currently trading at a premium relative to the industry and historical metrics, with its forward 12-month price-to-earnings (P/E) ratio sitting above the five-year average.
Image Source: Zacks Investment Research
Moreover, STRL is priced higher than some of its industry peers, such as AECOM, Fluor and KBR, which trade at 22.88X, 20.69X and 10.3X, respectively.
Final Take on STRL Stock
Sterling remains well-positioned for long-term growth, supported by strong execution, expanding backlog and continued strength in mission-critical markets like data centers and transportation. The company’s solid project pipeline and disciplined approach provide good visibility into performance over the next few years, with it maintaining confidence in sustained earnings momentum through 2026.
However, near-term challenges such as softness in the Building Solutions segment and macro uncertainties could weigh on performance. Elevated valuation levels relative to peers and the broader industry may also limit upside potential in the short term, despite steady earnings estimates for 2025 and 2026.
Given the current setup, this Zacks Rank #3 (Hold) company is likely to maintain stable performance in the near term. Existing investors can continue to hold STRL, while new investors may wait for a more attractive entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Should You Buy, Hold or Sell Sterling Stock Post Q3 Earnings?
Key Takeaways
Sterling Infrastructure, Inc. (STRL - Free Report) reported third-quarter 2025 results on Nov. 3, with both earnings and revenues exceeding the Zacks Consensus Estimate by 24.7% and 12.5%, respectively. The company also delivered strong year-over-year growth across key metrics.
Digging Deeper Into Sterling’s Q3 Results
Adjusted diluted earnings per share stood at $3.48, up 58% from the prior-year quarter, while revenues of $689 million increased 32%. The growth was led by a 58% rise in the E-Infrastructure Solutions segment, including 42% organic growth, and a 10% increase in Transportation Solutions. Gross margin expanded 280 basis points to 24.7%, driven by the continued shift toward higher-margin, mission-critical projects such as data centers. Supported by strong revenues and margin gains, adjusted EBITDA grew 47% year over year to $156 million and operating cash flow remained solid at $84 million in the quarter.
STRL Stock Outperforms Peers, Industry & Market
Image Source: Zacks Investment Research
Shares of Sterling have gained 32.7% in the past three months compared with the Zacks Engineering - R and D Services industry and the S&P 500’s growth of 3.8% and 8.9%, respectively. STRL stock has also outperformed the broader Construction sector's 1% rise during the same period.
The 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 and Flour have rallied 9.6% and 9.4%, respectively, while KBR has lost 14.1%.
Sterling’s third-quarter results underscored strong execution and momentum. Let us look at what fueled the performance.
Data Center Strength Drives Sterling’s Infrastructure Growth
Sterling’s E-Infrastructure business continued to perform strongly, supported by rising demand for large and complex projects. The company’s strategic focus on mission-critical work, including data centers, e-commerce distribution and manufacturing facilities, has strengthened its position in high-growth markets. Efficient execution and strong project management capabilities have further enhanced its performance in this segment.
During the quarter, the data-center market remained the key growth driver, with revenues from this area rising more than 125% year over year. The company continued to benefit from its ability to complete large-scale site development projects on or ahead of schedule, which remains highly valued by clients.
Looking ahead, Sterling expects strong momentum in data centers to continue into 2026, supported by a solid pipeline of new projects and healthy customer demand. For 2025, the company anticipates E-Infrastructure revenue growth of around 30% or higher on an organic basis and close to 50% including the CEC acquisition, reflecting the continued expansion of its service capabilities and market reach.
Strong Backlog Strengthens Sterling’s Growth Outlook
Sterling ended the third quarter with a strong backlog, supported by healthy project wins and strong demand across key end markets. The company’s backlog reached $2.6 billion, up 64% from the prior year, highlighting solid visibility for the coming quarters. E-Infrastructure Solutions accounted for $1.8 billion of total backlog, up 97% year over year, underscoring the strength of Sterling’s positioning in high-growth infrastructure segments. Including unsigned awards and future phase opportunities, total potential work now exceeds $4 billion. This strong position provides a solid foundation for continued growth and reflects customer confidence in Sterling’s capabilities and execution.
Looking ahead, the company remains optimistic about its multi-year growth prospects, backed by robust customer pipelines and expanding geographic reach. Clients are planning long-term capital deployments, with Sterling aligning closely to support these initiatives. The company expects another record year in 2025, raising full-year guidance for revenues and earnings, reinforcing its confidence in sustained growth momentum.
Transportation Strength Underpins Sterling’s Profit Momentum
Sterling’s Transportation Solutions business continued to show steady progress, supported by strong demand and disciplined project selection. The company focused on high-value, design-build, aviation and rail projects, which contributed to stronger margins and improved profitability. In the third quarter, the segment’s adjusted operating profit increased 40% year over year. A continued shift toward complex, higher-margin work helped balance performance across markets and enhance overall efficiency.
Backlog for the segment increased 23% to $733 million, supported by healthy bidding activity and multi-year visibility under federal infrastructure funding. The ongoing wind-down of low-bid highway operations in Texas continues to enhance margins, positioning the business for stronger profitability in 2026. For 2025, STRL expects adjusted operating profit margins in the range of 13.5% to 14%, up from 9.6% in 2024, reflecting continued progress toward a higher-return portfolio.
Earnings Estimates Trend of STRL
For 2025 and 2026, STRL’s earnings estimates have remained unchanged in the past 60 days at $9.57 and $10.98 per share, respectively. The revised estimated figures indicate 56.9% and 14.7% year-over-year growth, respectively.
Image Source: Zacks Investment Research
Conversely, AECOM and KBR’s earnings in the current year are likely to witness year-over-year increases of 15.9% and 13.5%, respectively, while Fluor’s earnings are expected to decline 12.5%.
Taking a Look at Sterling Stock’s Valuation
From a valuation standpoint, the company is currently trading at a premium relative to the industry and historical metrics, with its forward 12-month price-to-earnings (P/E) ratio sitting above the five-year average.
Image Source: Zacks Investment Research
Moreover, STRL is priced higher than some of its industry peers, such as AECOM, Fluor and KBR, which trade at 22.88X, 20.69X and 10.3X, respectively.
Final Take on STRL Stock
Sterling remains well-positioned for long-term growth, supported by strong execution, expanding backlog and continued strength in mission-critical markets like data centers and transportation. The company’s solid project pipeline and disciplined approach provide good visibility into performance over the next few years, with it maintaining confidence in sustained earnings momentum through 2026.
However, near-term challenges such as softness in the Building Solutions segment and macro uncertainties could weigh on performance. Elevated valuation levels relative to peers and the broader industry may also limit upside potential in the short term, despite steady earnings estimates for 2025 and 2026.
Given the current setup, this Zacks Rank #3 (Hold) company is likely to maintain stable performance in the near term. Existing investors can continue to hold STRL, while new investors may wait for a more attractive entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.