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7 days ago
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Sterling (NASDAQ:STRL) Surprises With Strong Q2
Civil infrastructure construction company Sterling Infrastructure (NASDAQ:STRL) announced better-than-expected revenue in Q2 CY2025, with sales up 5.4% year on year to $614.5 million. The company expects the full year's revenue to be around $2.13 billion, close to analysts' estimates. Its non-GAAP profit of $2.69 per share was 19.4% above analysts' consensus estimates. Is now the time to buy Sterling? Find out in our full research report. Sterling (STRL) Q2 CY2025 Highlights: Revenue: $614.5 million vs analyst estimates of $554.4 million (5.4% year-on-year growth, 10.8% beat) Adjusted EPS: $2.69 vs analyst estimates of $2.25 (19.4% beat) Adjusted EBITDA: $125.6 million vs analyst estimates of $110.5 million (20.4% margin, 13.7% beat) The company lifted its revenue guidance for the full year to $2.13 billion at the midpoint from $2.1 billion, a 1.2% increase Management raised its full-year Adjusted EPS guidance to $9.34 at the midpoint, a 8% increase EBITDA guidance for the full year is $445.5 million at the midpoint, above analyst estimates of $422.5 million Operating Margin: 17%, up from 12.5% in the same quarter last year Free Cash Flow Margin: 11.7%, down from 15.8% in the same quarter last year Market Capitalization: $8 billion On June 17th, Sterling announced that it had reached an agreement to acquire all of the assets of CEC Facilities Group LLC ("CEC"), and the transaction continues to progress towards closing. Company Overview Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction. Revenue Growth Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Sterling's sales grew at a solid 9.9% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis. We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Sterling's recent performance shows its demand has slowed as its annualized revenue growth of 7% over the last two years was below its five-year trend. This quarter, Sterling reported year-on-year revenue growth of 5.4%, and its $614.5 million of revenue exceeded Wall Street's estimates by 10.8%. Looking ahead, sell-side analysts expect revenue to grow 7.2% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its newer products and services will not catalyze better top-line performance yet. At least the company is tracking well in other measures of financial health. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Operating Margin Sterling has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.4%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it's a show of well-managed operations if they're high when gross margins are low. Analyzing the trend in its profitability, Sterling's operating margin rose by 7.2 percentage points over the last five years, as its sales growth gave it immense operating leverage. In Q2, Sterling generated an operating margin profit margin of 17%, up 4.5 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead. Earnings Per Share Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Sterling's EPS grew at an astounding 41.6% compounded annual growth rate over the last five years, higher than its 9.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. Diving into the nuances of Sterling's earnings can give us a better understanding of its performance. As we mentioned earlier, Sterling's operating margin expanded by 7.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don't tell us as much about a company's fundamentals. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For Sterling, its two-year annual EPS growth of 40.5% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future. In Q2, Sterling reported adjusted EPS at $2.69, up from $1.67 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Sterling's full-year EPS of $7.76 to grow 13.8%. Key Takeaways from Sterling's Q2 Results We were impressed that Sterling beat analysts' revenue and EBITDA expectations this quarter. We were also excited its full-year guidance was raised. Zooming out, we think this was a solid print. The stock traded up 4.1% to $283.65 immediately following the results. Sterling had an encouraging quarter, but one earnings result doesn't necessarily make the stock a buy. Let's see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-08-2025
- Business
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Are Robust Financials Driving The Recent Rally In Sterling Infrastructure, Inc.'s (NASDAQ:STRL) Stock?
Most readers would already be aware that Sterling Infrastructure's (NASDAQ:STRL) stock increased significantly by 59% over the past three months. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. Particularly, we will be paying attention to Sterling Infrastructure's ROE today. Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. How Do You Calculate Return On Equity? The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Sterling Infrastructure is: 34% = US$280m ÷ US$827m (Based on the trailing twelve months to March 2025). The 'return' is the income the business earned over the last year. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.34 in profit. See our latest analysis for Sterling Infrastructure What Is The Relationship Between ROE And Earnings Growth? We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. Sterling Infrastructure's Earnings Growth And 34% ROE First thing first, we like that Sterling Infrastructure has an impressive ROE. Additionally, the company's ROE is higher compared to the industry average of 14% which is quite remarkable. As a result, Sterling Infrastructure's exceptional 36% net income growth seen over the past five years, doesn't come as a surprise. Next, on comparing with the industry net income growth, we found that Sterling Infrastructure's growth is quite high when compared to the industry average growth of 15% in the same period, which is great to see. Earnings growth is an important metric to consider when valuing a stock. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Sterling Infrastructure fairly valued compared to other companies? These 3 valuation measures might help you decide. Is Sterling Infrastructure Using Its Retained Earnings Effectively? Sterling Infrastructure doesn't pay any regular dividends to its shareholders, meaning that the company has been reinvesting all of its profits into the business. This is likely what's driving the high earnings growth number discussed above. Summary On the whole, we feel that Sterling Infrastructure's performance has been quite good. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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25-07-2025
- Business
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Will Modular CapEx and M&A Keep Sterling in Growth Mode?
Sterling Infrastructure, Inc. STRL is actively investing in enhancing its modular construction capabilities and inorganic business initiatives. The current market demand is actively shifting toward data center buildouts, AI infrastructure and utility grid modernization, which is proving favorable for the company's prospects in the long term. Amid this robust market trend, STRL is engaging in expanding its modular fabrication capacity, being optimistic about the scalable and margin-accretive characteristics of such mission-critical the E-Infrastructure Solutions segment, Sterling operates the business for modular buildings and data centers. Backed by the robust market trends, the E-Infrastructure segment's (51% of first-quarter 2025 revenues) backlog grew 27% year over year to $1.2 billion as of the first quarter of 2025, with data center-related work accounting for more than 65%.Besides modular expenditures, Sterling also actively focuses on making strategic investments in mergers and acquisitions (M&A). It believes that bolt-on acquisitions and scalable partnerships are likely to boost its business capabilities and market share, thus offering it a competitive advantage over its peers. Recently, on June 17, 2025, STRL announced the signing of a definitive agreement to acquire CEC Facilities Group, LLC for $505 million, under its E-Infrastructure Solutions segment. CEC Facilities is a non-union electrical contractor with operations focused on fast-growing markets such as data centers, semiconductors and manufacturing, based in Texas. The combined business is expected to benefit from cross-selling opportunities and a broader customer base, thus strengthening Sterling's market reach across Texas and other key 2025, STRL expects capital expenditures to be between $70 million and $80 million, up from $70.8 million in 2024. Thus, with the in-house strategies combined with the favorable market fundamentals, the company is expected to boost its revenue visibility and profit structure in the upcoming period. STRL Stock's Price Performance vs. Other Market Players Shares of this Texas-based infrastructure services provider have surged 69% 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. Image Source: Zacks Investment Research Moreover, firms like Quanta Services, Inc. PWR and EMCOR Group, Inc. EME offer substantial competition to Sterling in the public infrastructure field, especially across mission-critical infrastructure solutions. Although the market trends are favoring these companies, they are falling behind in realizing benefits from the robust fundamentals compared with STRL. In the past three months, shares of Quanta Services and EMCOR have gained 40.2% and 41.1%, respectively. 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 27.78, as evidenced by the chart below. The overvaluation of the stock compared with its industry peers indicates its strong potential in the market, given the favorable trends backing it up. Image Source: Zacks Investment Research Notably, Quanta Services and EMCOR are currently trading at a forward 12-month P/E ratio of 36.62 and 23.48, respectively. EPS Trend of STRL For 2025 and 2026, STRL's earnings estimates have remained unchanged over the past 60 days at $8.61 and $9.48 per share, respectively. However, the estimated figures reflect 41.2% and 10.1% year-over-year growth, respectively. Image Source: Zacks Investment Research The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Quanta Services, Inc. (PWR) : Free Stock Analysis Report EMCOR Group, Inc. (EME) : Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-07-2025
- Business
- Yahoo
Sterling Infrastructure (STRL) Stock Falls Amid Market Uptick: What Investors Need to Know
In the latest close session, Sterling Infrastructure (STRL) was down 1.32% at $247.65. This change lagged the S&P 500's daily gain of 0.14%. At the same time, the Dow lost 0.04%, and the tech-heavy Nasdaq gained 0.38%. The civil construction company's shares have seen an increase of 15.13% over the last month, surpassing the Construction sector's gain of 8.47% and the S&P 500's gain of 5.35%. Analysts and investors alike will be keeping a close eye on the performance of Sterling Infrastructure in its upcoming earnings disclosure. The company is expected to report EPS of $2.26, up 35.33% from the prior-year quarter. Meanwhile, the latest consensus estimate predicts the revenue to be $555.13 million, indicating a 4.75% decrease compared to the same quarter of the previous year. For the annual period, the Zacks Consensus Estimates anticipate earnings of $8.61 per share and a revenue of $2.09 billion, signifying shifts of +41.15% and -1.22%, respectively, from the last year. Investors should also pay attention to any latest changes in analyst estimates for Sterling Infrastructure. Such recent modifications usually signify the changing landscape of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability. Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system. The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.54% higher. Sterling Infrastructure currently has a Zacks Rank of #3 (Hold). In terms of valuation, Sterling Infrastructure is presently being traded at a Forward P/E ratio of 29.16. This signifies a premium in comparison to the average Forward P/E of 21.2 for its industry. Meanwhile, STRL's PEG ratio is currently 1.94. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Engineering - R and D Services industry currently had an average PEG ratio of 1.8 as of yesterday's close. The Engineering - R and D Services industry is part of the Construction sector. This industry currently has a Zacks Industry Rank of 152, which puts it in the bottom 39% of all 250+ industries. The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
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12-07-2025
- Business
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Sterling Infrastructure (STRL) Increases Despite Market Slip: Here's What You Need to Know
Sterling Infrastructure (STRL) ended the recent trading session at $241.76, demonstrating a +2.31% change from the preceding day's closing price. The stock outpaced the S&P 500's daily loss of 0.33%. Elsewhere, the Dow saw a downswing of 0.63%, while the tech-heavy Nasdaq depreciated by 0.22%. Shares of the civil construction company have appreciated by 15.65% over the course of the past month, outperforming the Construction sector's gain of 5.56%, and the S&P 500's gain of 4.07%. The investment community will be closely monitoring the performance of Sterling Infrastructure in its forthcoming earnings report. In that report, analysts expect Sterling Infrastructure to post earnings of $2.26 per share. This would mark year-over-year growth of 35.33%. In the meantime, our current consensus estimate forecasts the revenue to be $555.13 million, indicating a 4.75% decline compared to the corresponding quarter of the prior year. For the full year, the Zacks Consensus Estimates project earnings of $8.61 per share and a revenue of $2.09 billion, demonstrating changes of +41.15% and -1.22%, respectively, from the preceding year. Any recent changes to analyst estimates for Sterling Infrastructure should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability. Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system. The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.54% higher. Sterling Infrastructure is holding a Zacks Rank of #3 (Hold) right now. Investors should also note Sterling Infrastructure's current valuation metrics, including its Forward P/E ratio of 27.46. For comparison, its industry has an average Forward P/E of 20.1, which means Sterling Infrastructure is trading at a premium to the group. It's also important to note that STRL currently trades at a PEG ratio of 1.83. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. STRL's industry had an average PEG ratio of 1.83 as of yesterday's close. The Engineering - R and D Services industry is part of the Construction sector. With its current Zacks Industry Rank of 189, this industry ranks in the bottom 24% of all industries, numbering over 250. The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Be sure to use to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
