Can Sterling's Transportation Benefit From Federal Funding in 2026?

Sterling Infrastructure, Inc. STRL is entering an important phase for its Transportation Solutions segment as the current federal funding cycle moves toward the conclusion in September 2026. With strong visibility into upcoming work and steady bid activity across key regions, the company appears positioned to benefit from the continuation of federally supported infrastructure spending. The central question now is whether federal funding can help sustain Transportation activity through 2026 as project pipelines evolve and state-level priorities shift.

In the third quarter of 2025, the company reported notable momentum within Transportation Solutions. Revenues increased 10% year over year, supported by healthy market demand and a shift toward services offering stronger strategic value. Adjusted operating profit rose 40% year over year, while the Transportation backlog reached $733 million, a 23% year-over-year increase. Although the sequential backlog was roughly flat, new awards kept pace with burn, indicating that the segment continues to replenish its pipeline even during elevated activity levels.

The company noted that it has built more than two years of Transportation backlog heading into the final stretch of the federal funding cycle. This visibility matters, as state agencies typically adjust their project mix when nearing funding transitions. While large multiyear awards may slow, smaller and mid-sized transportation projects often move forward, supporting continued activity across Sterling’s core Rocky Mountain and Arizona markets through 2026.

Another factor shaping the outlook is the wind-down of the low-bid heavy highway operation in Texas. Though this shift modestly affects backlog, it aligns the Transportation portfolio with higher-value opportunities that support long-term objectives.

Overall, federal funding stability, strong backlog coverage and consistent bid activity suggest that Sterling’s Transportation Solutions segment is well positioned to benefit from the federal funding cycle as it moves into 2026.

STRL’s Price Performance, Valuation and Estimates

Shares of this Texas-based infrastructure services provider have surged 13% in the past three months, outperforming the Zacks Engineering - R and D Services industry’s 2.8% growth. In the same time frame, other industry players like AECOM ACM and KBR, Inc. KBR have declined 18% and 11.9%, respectively, while Fluor Corporation FLR has gained 5.9%,

Price Performance

STRL stock is currently trading at a premium compared with its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 27.33, as shown in the chart below. 

Conversely, industry players, such as AECOM, Fluor and KBR, have P/S multiples of 18.12, 19.67 and 10.64, respectively.

For 2025 and 2026, STRL’s earnings estimates have increased in the past 30 days to $10.43 and $11.95 per share, respectively. The revised estimated figures indicate 71% and 14.6% year-over-year growth, respectively.

Conversely, AECOM and KBR’s earnings in the current year are likely to witness year-over-year increases of 8% and 13.8%, respectively, while Fluor’s earnings are expected to decline 7.3%.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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