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Bull of the Day: Sterling Infrastructure (STRL)

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Key Takeaways

  • {\"0\":\"Sterling is a construction firm that is building data centers. \",\"1\":\"It closed on its acquisition of electrical engineering firm CEC on Sep 2, 2025. \",\"2\":\"After record gross profit margins in Q2, earnings are expected to soar 56.9% in 2025. \"}

Sterling Infrastructure, Inc.(STRL - Free Report) is seeing big growth from its data center business. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 56.9% this year.

Sterling is an engineering and construction firm with a market cap of $9.2 billion. It operates in three segments: E-Infrastructure, Transportation and Building Solutions in the United States. Sterling focuses on the Southern, Northeastern, Mid-Atlantic and Rocky Mountain regions as well as the Pacific Islands.

E-Infrastructure includes data centers, manufacturing, warehouses and distribution centers. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, rail and storm drainage systems.

Building Solutions includes residential and commercial concrete foundation solutions including single family and multi-family homes and parking structures.

Sterling Closes on the CEC Facilities Group Deal

On Sep 2, 2025, Sterling announced it had completed its acquisition of Irving, Texas-based CEC Facilities Group, LLC. CEC is a specialty electrical and mechanical contractor.

The acquisition is expected to be accretive to Sterling in the remainder of calendar year 2025.

It will add revenue of approximately $130 to $138 million and earnings per share of $0.22 to $0.24.

This acquisition will expand the company’s E-Infrastructure capabilities at a time of strong demand for distribution and data centers.

Analysts Raise 2025 and 2026 Earnings Estimates

Now that the deal has closed and Sterling has given an idea of the impact, it’s not a surprise that the analysts are raising their earnings estimates to get in line with the new guidance.

2 estimates were raised in the last month for 2025. It has pushed up the 2025 Zacks Consensus Estimate to $9.57 from $9.41.

That is earnings growth of 56.9% as Sterling only made $6.10 last year.

1 estimate was also revised higher for 2026 in the last month. The 2026 Zacks Consensus Estimate has also moved higher, to $10.98 from $10.65. That’s another 14.7% earnings growth.

Here’s what it looks like on the 5-Year Price and Consensus chart.

Zacks Investment Research
Image Source: Zacks Investment Research

A Record Second Quarter 2025 for Sterling

On Aug 4, 2025, Sterling reported its second quarter results which beat on the Zacks Consensus for the 10th quarter in a row.

It was a record quarter with revenue up 21% to $614.5 million. E-Infrastructure, which includes the data center business, jumped 29% while Transportation Solutions was up 24%. Building Solutions remained soft as the housing market remains challenged.

Gross profit margins jumped to 23.3%, a new high for the company, from 19.3% a year ago.

Sterling had a $2 billion backlog, up 24% compared to the prior year second quarter.

Sterling Shares Outperform NVIDIA in 2025

Shares of Sterling have been on fire in 2025. It has jumped 88.3% which is outperforming the AI Revolution leader, NVIDIA, which has gained 28.1% year-to-date.

Zacks Investment Research
Image Source: Zacks Investment Research

Sterling is no longer a “cheap” stock, but it is attractive given its growth. It has a forward P/E of 31.5 and a PEG ratio of 2.1. A PEG ratio under 1.0 usually indicates value but 2.1 is not stretched.

If you are looking for an infrastructure stock for the AI Revolution, Sterling should be on your short list.

[In full disclosure, Tracey owns Sterling in her own personal portfolio.]


 


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