Is Sterling the Silent Winner of America's Digital Infrastructure?

Sterling Infrastructure, Inc. STRL is quietly carving out a commanding role in the buildout of America’s digital backbone. The company’s second-quarter 2025 results highlighted this shift, with revenues rising 21% year over year to $614.5 million, well above expectations. Adjusted EPS surged 41% to $2.69, and margins expanded meaningfully as Sterling capitalized on mission-critical projects.

The story lies in Sterling’s E-Infrastructure Solutions segment, where demand from data centers and e-commerce facilities has exploded. Data centers now account for 62% of E-Infrastructure backlog, with revenues from that market more than doubling year over year. This concentration reflects the surge in AI, cloud and semiconductor-related investment, where speed and reliability are paramount — areas where Sterling’s project execution provides a competitive edge.

A strong $2 billion backlog, including $1.2 billion in E-Infrastructure, gives multiyear visibility. Further, the pending acquisition of CEC Facilities Group will add electrical and mechanical capabilities, strengthening Sterling’s ability to deliver end-to-end solutions. This positions the company not just as a contractor, but as a strategic partner in complex facility development.

Macro trends also favor Sterling. Rising capital expenditures by hyperscale tech firms, a pipeline of semiconductor plants and accelerating e-commerce buildouts all align with Sterling’s core strengths. Near-term housing headwinds remain a drag on its Building Solutions arm, but the company’s diversified portfolio reduces that risk.

In the race to modernize digital infrastructure, Sterling may not make headlines like the tech giants, but it’s emerging as a silent winner — one with consistent execution, expanding margins and an enviable growth runway.

Competitors in the Digital Infrastructure Race

While Sterling is making strides in data centers and e-infrastructure, it competes with industry heavyweights such as Quanta Services PWR and MasTec MTZ. Both Quanta Services and MasTec are well-positioned in the digital and clean energy buildout, giving them strong footholds in overlapping markets.

Quanta Services brings scale and expertise in utility and grid modernization, a critical complement to the power-hungry data centers driving demand. Quanta Services has repeatedly highlighted its role in transmission and electrification, which dovetails with Sterling’s data-center-centric growth.

MasTec continues to expand aggressively into telecommunications and renewable infrastructure. MasTec benefits from large projects in fiber and clean energy, but it is also competing for capital flowing into digital infrastructure. Like Sterling, MasTec leverages its ability to execute complex, multi-phase projects with speed and efficiency.

Together, Quanta Services and MasTec not only underline the competitive intensity Sterling must navigate but also validate the scale of opportunity in America’s digital transformation.

STRL Stock’s Price Performance

Shares of this Texas-based infrastructure services provider have surged 59.9% in the past three months, significantly outperforming the Zacks Engineering - R and D Services industry, the broader Zacks Construction sector and the S&P 500 index.

STRL Stock’s 3-Month Performance

Sterling’s Valuation Trend

Sterling stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 32.96, as evidenced by the chart below.

EPS Estimate Trend of Sterling Stock

For 2025 and 2026, STRL’s earnings estimates have trended upward in the past 30 days to $9.57 and $10.98 per share, respectively. The revised estimated figures reflect 56.9% and 14.7% year-over-year growth, respectively. 
 

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

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

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