Bull of the Day: Sterling Infrastructure (STRL)

As a cornerstone to advancing infrastructure in the United States, Sterling Infrastructure’s STRL stock looks poised for a sharp rebound amid recent market volatility.

Reassuringly, this year’s pullback in Sterling Infrastructure’s stock appears to be a healthy correction considering STRL has skyrocketed +2,300% over the last decade.

That said, more upside appears to be ahead as the E-infrastructure, transportation, and building solutions company has added to its impressive backlog.

Advancing America’s Infrastructure

1.  E-Infrastructure Solutions: Sterling Infrastructure focuses on large-scale site development for next-generation manufacturing, data centers, e-commerce distribution centers, and energy projects. The segment is its fastest-growing and most profitable, addressing critical needs in modern infrastructure.

This includes a $325 million contract for the Hyundai Engineering America facility in Georgia which is aimed at boosting the production of EVs and hybrid cars, covering over 600 acres, and is the largest E-Infrastructure project in the company's history. In addition to this, advancements in artificial intelligence have driven the need for Sterling Infrastructure's data center solutions, with contract rewards of over $300 million as well.  

2.  Transportation Solutions: Sterling Infrastructure is involved in constructing and rehabilitating highways, roads, bridges, airports, ports, and water systems. These projects are essential for improving connectivity and supporting economic growth.

3.  Building Solutions: The company also provides concrete foundation services for residential and commercial buildings, helping to meet housing and urban development demand.

Sterling Adds Utah Department of Transportation Project

Entering 2025, Sterling Infrastructure had a combined backlog of $1.83 billion and was recently awarded an interstate roadway project with the Utah Department of Transportation (UDOT) in February. The project is expected to begin this spring and will continue through 2027 and has a total value of $195 million with Sterling Infrastructure having a 60% interest through its subsidiary Ralph L. Wadsworth (RLW).

Notably, RLW is also embarking on the next phase of a multi-year project with the Colorado Department of Transportation (CDOT) which has an award of $86 million.    

Impressive Growth Trajectory & Positive EPS Revisions

Coming off a fifth consecutive year of record top and bottom-line growth, Sterling Infrastructure’s total sales are expected to dip 4% in fiscal 2025 but are projected to rebound and rise 8% in FY26 to $2.2 billion.

Alluding to Sterling Infrastructure’s impressive operating efficiency is that despite projections of a modest dip in sales this year, annual earnings are expected to soar 34% to $8.21 per share compared to EPS of $6.10 in FY24. Plus, FY26 EPS is projected to pop another 14% to $9.37.

Correlating with bullish sentiment is that over the last 60 days, FY25 and FY26 EPS estimates have soared 29% and 32%, respectively.   

Record Gross Margins & Operating Cash Flow

Underlying financial factors that point to STRL as a viable long-term investment are that Sterling Infrastructure achieved record gross margins of more than 20% last year and a peak in operating cash flow at $500 million.

Healthy Correction for STRL

While investors may have gotten the jitters to invest in a stock that continued to climb with little interruption, the pullback in STRL certainly looks like a healthy correction. To that point, STRL is trading 45% below its 52-week and record high of $206 a share, which it hit in January.

Furthermore, at around $115, STRL trades at 13.8X forward earnings. This is well below its decade-long high of 52.3X and is on par with a median of 13.3X during this period. Trading at a discount to the S&P 500’s 21.2X forward earnings multiple, Sterling Infrastructure’s stock also trades beneath its Zacks Engineering-R and D Services Industry average of 16.9X with some of the other notable names in the space being Fluor Corporation FLR and AECOM ACM.  

Bottom Line

Sporting a Zacks Rank #1 (Strong Buy) and landing the Bull of the Day, Sterling Infrastructure’s stock may be one of the best buy-the-dip prospects to consider at the moment. This is evident in the compelling trend of positive earnings estimate revisions, especially with STRL trading at a much more reasonable P/E valuation.

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This article originally published on Zacks Investment Research (zacks.com).

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