Sterling Stock Soars 45% in 6 Months: Should You Buy, Sell or Hold?

Shares of Sterling Infrastructure, Inc. STRL have surged 44.5% in the past six months, significantly outperforming the Zacks Engineering – R&D Services industry’s 12.5% growth. The stock has further outperformed the broader Construction sector and the S&P 500, which have advanced 12.6% and 11.1%, respectively, in the same period.

Favorable U.S. infrastructure spending continues to support growth for Sterling, backed by steady public and private investment across transportation, utilities and energy projects. Easing interest rates have improved funding visibility and encouraged new project starts. The company is benefiting from strong demand for mission-critical site development, particularly in data centers, e-commerce and industrial facilities. Growth in the E-Infrastructure segment and the acquisition of CEC are expanding electrical capabilities and supporting execution. A rising backlog and healthy pipeline provide better revenue visibility and position the company for steady expansion.

STRL Stock Outperforms Peers, Industry & Market

Furthermore, this Texas-based infrastructure services provider has outperformed some other players, including AECOM ACM, Fluor Corporation FLR and KBR, Inc. KBR in the past six months. In the said time frame, AECOM, Flour and KBR have lost 4.9%, 3.8% and 20.4%, respectively. Let us look at the factors driving this performance.

What Is Driving Comfort Systems’ Momentum?

Data Centers Drive E-Infrastructure Growth: Sterling’s E-Infrastructure business continues to perform strongly, supported by rising demand for large and complex projects. The company’s focus on mission-critical work, including data centers, e-commerce distribution and manufacturing facilities, strengthens its position in higher-growth markets. Disciplined execution and solid project management remain key contributors to performance in this segment. 

Recent operating trends highlight data centers as the primary growth driver, with revenues from this market rising more than 125% year over year in the third quarter of 2025. Looking ahead, Sterling expects data-center momentum to carry in 2026, supported by a solid pipeline of new projects and healthy customer demand.

Solid Backlog and Pipeline Provide Visibility: Sterling’s combined backlog, unsigned awards and future phase opportunities continue to provide multi-year visibility, offering a clear line of sight on revenues through 2026. The company emphasized that it now has a deep pool of work spanning E-Infrastructure, manufacturing, data centers and e-commerce, reflecting strong customer relationships and ongoing capital commitments.

In the third quarter, Sterling reported a $2.6 billion signed backlog, up 64% year over year. With negotiated awards and future phases of ongoing megaprojects, total potential work exceeds $4 billion. E-Infrastructure accounts for most of this pipeline, supported by a high volume of large, complex, multi-phase developments. Looking forward, Sterling sees sustained demand across core markets, supported by long-term customer planning, strong capital allocation by hyperscalers and upcoming manufacturing megaprojects.

E-Commerce and Manufacturing Broaden Mission-Critical Growth: STRL continues to see rising demand beyond data centers, supported by stronger activity in e-commerce and manufacturing markets. E-commerce-related backlog increased more than 150% as customers expand fulfillment networks and adopt automation, leading to larger and more complex projects.

Manufacturing demand also remains steady, with semiconductor and industrial megaprojects moving through permitting and early construction stages. With visibility across 2026 and 2027, these markets are expected to support longer project cycles, steady margins and a more diversified revenue base.

Earnings Estimate Trend of STRL

Sterling’s 2026 earnings estimate has remained unchanged over the past 60 days at $11.95 per share. However, the estimated figure for 2026 implies growth of 14.6% year over year on projected revenue growth of 19.1%.

Hurdles to STRL’s Growth Trend

Despite favorable demand trends, some near-term pressures remain. Residential-related activity stays soft as affordability concerns continue to weigh on housing demand. Higher project complexity and longer permitting timelines on large developments can also affect execution schedules. These factors may create variability in project timing, even as underlying infrastructure demand remains steady.

In addition, STRL faces cost and operational risks that could limit profitability. Elevated inflation and uneven labor availability may increase expenses and slow project progress. Competitive bidding and execution challenges on large, complex jobs may further pressure margins. Any delays in project awards or a slowdown in infrastructure spending could weigh on near-term growth and earnings visibility.

Taking a Look at Sterling Stock’s Valuation

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 34.05, as shown in the chart below.

Furthermore, STRL stock appears overvalued compared with peer companies, with AECOM, Fluor and KBR trading at a forward P/E of 17.59, 21.1 and 10.46, respectively.

How to Play STRL Stock?

Sterling continues to benefit from strong execution across mission-critical markets, supported by steady demand in data centers, e-commerce and manufacturing. Expanding E-Infrastructure exposure, a solid backlog and a visible pipeline provide support for growth as the company moves further into 2026. The integration of CEC also strengthens electrical capabilities and enhances long-term positioning across complex projects.

That said, near-term challenges remain. Softness in residential-related activity, cost pressures and execution risks on large projects could create volatility. In addition, the stock trades at elevated valuation levels compared with peers, which may cap near-term upside.

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

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