Sterling Infrastructure, Inc. (STRL Quick QuoteSTRL - Free Report) delivered a strong third quarter of 2026, with adjusted earnings and revenues topping the Zacks Consensus Estimate and increasing sharply year over year.

Results were driven by outsized growth in E-Infrastructure Solutions, supported by robust organic growth, strong execution and contributions from acquired operations. Transportation Solutions revenues declined as Sterling continued reallocating resources toward higher-margin E-Infrastructure opportunities. Meanwhile, Building Solutions remained pressured by lower homebuilder activity and ongoing housing affordability challenges.

Inside Sterling’s Q3 Headlines

Adjusted earnings were $7.58 per share, compared with $3.48 in the year-ago quarter. The figure beat the Zacks Consensus Estimate of $6.07 by 24.9%.

Revenues surged 127% to $1.56 billion, topping the consensus mark of $1.17 billion by 33.8%. The company generated adjusted net income of $235.4 million, up from $107.7 million a year earlier, while reported net income advanced to $214.9 million from $92.1 million.

Combined backlog, which includes signed work and unsigned awards, reached $6.14 billion at September-end, an increase of 78% from a year earlier. The third-quarter book-to-burn ratios stood at 0.9 times for signed backlog and 1.4 times for combined backlog, reflecting a broader volume of awarded work than executed contracts alone.

Including approximately $1.7 billion of next phases in design, total scoped work approached $8 billion, up roughly 90% year over year and 11% sequentially. Within E-Infrastructure, mission-critical projects represented approximately 95% of the segment's opportunity pool, with additional development potential on customer-owned land.

STRL Posts Higher Profit as Operating Margin Expands

Gross profit increased to $377.3 million from $170.2 million a year earlier. Gross margin, however, narrowed to approximately 24.1% from 24.7%, as costs grew slightly faster than revenues.

Operating income more than doubled to $306.8 million from $125.3 million. Operating margin improved to 19.6% from 18.2%, an expansion of 140 basis points, reflecting stronger operating leverage.

Adjusted EBITDA climbed to $337.8 million from $155.8 million. Adjusted EBITDA margin eased to 21.6% from 22.6%, reflecting a higher contribution from CEC, which was owned for only one month of the prior-year third quarter.

Q3 Segmental Discussion of Sterling

E-Infrastructure Solutions revenues soared 212% to $1.30 billion from $417.1 million, accounting for 83% of quarterly sales. Strength across site development and electrical services supported the increase. CEC revenues quadrupled on a pro forma year-over-year basis, with management now seeing the potential for more than $1 billion in CEC revenues during 2026.

Segment adjusted operating income advanced 171% to $302.4 million from $111.7 million. The adjusted operating margin was 23.2%, compared with 26.8% a year earlier. Site development margins remained in line with first-half levels, while CEC operating margins improved both year over year and sequentially.

Transportation Solutions revenues fell 3.1% to $165.2 million from $170.5 million as resources shifted toward higher-margin E-Infrastructure projects. Nevertheless, adjusted operating income grew 22.2% to $32.6 million. The segment's adjusted operating margin widened 410 basis points to 19.7%, supported by disciplined project selection and execution.

Building Solutions revenues declined 5.4% to $96 million from $101.4 million amid slower homebuilder activity. Adjusted operating income dropped 38.7% to $7.7 million, while the adjusted operating margin contracted to 8% from 12.4%. Management expects housing affordability pressures to weigh on demand through the remainder of the year.

STRL's Cash Flow Supports Financial Flexibility

Net income attributable to Sterling increased 130.4% year over year to $466.7 million from $202.6 million, reflecting significantly stronger earnings generation. Cash and cash equivalents were $216.9 million at September-end compared with $390.7 million at 2025-end. Total debt declined to approximately $95 million from $291 million during the same period, leaving Sterling with a net cash position of about $122 million.

The company repurchased $107.3 million of shares during the nine-month period. It had $267 million available under its $400 million repurchase authorization at quarter-end. Sterling also expanded its revolving credit facility to $1.5 billion in July and extended its maturity to July 2031.

Sterling Raises 2026 Outlook

Sterling raised its 2026 revenue guidance to $4.63-$4.73 billion from the prior range of $4-$4.15 billion, reflecting strong execution, expanding project opportunities and sustained demand for E-Infrastructure services. The company now expects net income of $596-$604 million and adjusted net income of $675-$683 million.

Diluted earnings are projected at $19.16-$19.42 per share, up from the previous forecast of $17.25-$17.85. Adjusted earnings are expected to be $21.70-$21.96 per share compared with the prior outlook of $19.70-$20.30.

The company also lifted EBITDA guidance to $905-$916 million from $829-$854 million and adjusted EBITDA guidance to $970-$981 million from the earlier range of $891-$916 million.

STRL’s Zacks Rank & Recent Construction Releases

Sterling currently has a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Masco’s results benefited from pricing actions, cost-saving initiatives and lower year-over-year tariff costs, partially offset by higher commodity and employee-related expenses. Masco raised its 2026 adjusted earnings guidance to $4.65-$4.75 per share from the previous range of $4.40-$4.60, citing strong operational performance year to date. Reported earnings are projected to be between $4.51 and $4.61 per share.

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Comfort Systems' management maintained a positive outlook, supported by strong customer demand, an expanding project pipeline and consistent operating execution. During the third quarter, Comfort Systems acquired Boys Electrical Contractors in Florida and a Texas-based modular construction business, strengthening its presence across electrical services and customized building components. FIX expects to sustain organic growth, high profitability and solid cash generation through the remainder of 2026 and into 2027.

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United Rentals raised its 2026 revenue outlook to $18-$18.2 billion from $17.5-$17.8 billion. Adjusted EBITDA is now projected at $8.3-$8.4 billion compared with $7.98-$8.13 billion previously. Operating cash flow is expected at $6.25-$6.85 billion, up from $5.85-$6.65 billion. Management cited customer confidence, backlogs and large-project momentum as support for the raised outlook.