Core Insights - The individual has retired after over 43 years in investment research, now operating independently to provide actionable investment insights [1] - The focus is on rules/factor-based equity investing strategies, emphasizing the use of numbers to inspire human intelligence-driven investment stories rather than serving the numbers themselves [1] - The approach combines factor analysis with classic fundamental analysis to uncover the true story of a company and its stock, highlighting the importance of future potential over past data [1] Investment Experience - The individual has extensive experience covering a wide range of stocks, including large cap, small cap, micro cap, value, growth, and income [1] - Previous roles included managing a high-yield fixed-income fund and conducting research on quantitative asset allocation strategies, which are foundational to modern Robo Advising [1] - The individual has edited and written stock newsletters, notably the Forbes Low Priced Stock Report, and served as an assistant research director at Value Line [1] Educational Contributions - There is a strong passion for investor education, demonstrated through numerous seminars on stock selection and analysis [1] - The individual is the author of two books: "Screening The Market" and "The Value Connection," further contributing to investor education [1]

Key Takeaways STRL is benefiting from mission-critical E-Infrastructure growth driven by large data center and projects.STRL posted a $2.6B Q3 backlog, up 64% year over year, providing multi-year project visibility through 2026.MTZ reported a record $16.78B backlog as power, clean energy and communications demand offset timing issues.Ongoing public and private investment continues to underpin demand across the U.S. infrastructure construction landscape, with activity spanning transportation networks, utilit ...

Core Insights - Sterling Infrastructure, Inc. (STRL) has shifted focus from low-bid projects to large, mission-critical developments, particularly in the data center market, which has become a key growth driver with triple-digit revenue growth year over year [1][9] Financial Performance - The company's profitability metrics have improved significantly, with gross margins expanding due to a better project mix, tighter risk controls, and improved pricing discipline [2] - Stronger operating cash flow generation has provided financial flexibility for debt reduction, share repurchases, and strategic acquisitions [2] Project Strategy - Disciplined project selection has led to a sharp increase in backlog, primarily driven by the E-Infrastructure segment, providing multiyear revenue visibility [3] - The selective bidding strategy has resulted in higher margins, stronger cash flows, and improved returns on capital, reinforcing the importance of project selection in Sterling's performance [4] Competitive Landscape - Sterling faces competition from key players like Quanta Services, Inc. and EMCOR Group, Inc., with Quanta focusing on power generation and EMCOR on mechanical and electrical contracting services [5][6] - Sterling differentiates itself by combining site development with mission-critical electrical services, allowing for faster revenue conversion and higher growth exposure to data center demand [7] Stock Performance and Valuation - STRL shares have increased by 34.9% over the past six months, outperforming the Zacks Engineering - R and D Services industry, the broader Construction sector, and the S&P 500 Index [8] - The stock is currently trading at a premium with a forward 12-month price-to-earnings (P/E) ratio of 26.65 [11] Earnings Estimates - Earnings estimates for 2025 and 2026 imply year-over-year growth of 71% and 14.6%, respectively, with current estimates remaining unchanged over the past 60 days [12]

Core Viewpoint - Sterling Infrastructure (STRL) is positioned to benefit from increasing infrastructure spending trends in the U.S. engineering and construction sector [1] Company Overview - STRL is a U.S.-based engineering and construction company that offers a wide range of infrastructure services across transportation, e-infrastructure, and building markets [1] Industry Trends - The company is well-positioned to capitalize on secular trends such as rising infrastructure investments, which are expected to drive growth in the engineering and construction sector [1]

Core Insights - Sterling Infrastructure, Inc.'s E-Infrastructure Solutions segment is the primary growth driver, accounting for approximately 55% of total revenues in the first nine months of 2025, with a year-over-year revenue growth of 37.1% [1][9] - Data center-related revenues have more than doubled, indicating strong demand from hyperscalers and enterprise customers, which is expected to provide long-term visibility rather than short-term fluctuations [2][9] - The Remaining Performance Obligations (RPOs) for the E-Infrastructure Solutions segment increased by 75.2% to $1.81 billion as of September 30, 2025, highlighting a robust multibillion-dollar pipeline [2][9] Market Position and Competition - Sterling faces competition from key players such as Quanta Services, Inc. and EMCOR Group, Inc., with Quanta focusing on power generation and transmission, while EMCOR is more involved in direct data center construction [5][6] - Sterling differentiates itself by integrating site development with mission-critical electrical services, allowing for earlier project phases and faster revenue conversion compared to competitors [7] Financial Performance - STRL's stock has gained 26% over the past six months, outperforming the Zacks Engineering - R and D Services industry, the broader Construction sector, and the S&P 500 Index [8] - Earnings estimates for 2025 and 2026 indicate year-over-year growth of 71% and 14.6%, respectively, with current estimates remaining unchanged over the past 60 days [10] - The stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 24.75, indicating a premium compared to industry peers [12]

Core Viewpoint - Analyst recommendations play a significant role in influencing stock prices, but their reliability is questionable, particularly for Sterling Infrastructure (STRL) [1][5]. Group 1: Analyst Recommendations - Sterling Infrastructure has an average brokerage recommendation (ABR) of 1.80, indicating a position between Strong Buy and Buy, based on recommendations from five brokerage firms [2]. - Of the five recommendations, three are Strong Buy, accounting for 60% of the total recommendations [2]. Group 2: Limitations of Brokerage Recommendations - Solely relying on brokerage recommendations for investment decisions may not be advisable, as studies indicate they often fail to guide investors effectively towards stocks with high price appreciation potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings due to vested interests, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][11]. Group 3: Zacks Rank vs. ABR - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) and is based on earnings estimate revisions, making it a more reliable indicator of near-term stock performance [8][12]. - Unlike the ABR, which is based solely on brokerage recommendations and may not be up-to-date, the Zacks Rank reflects timely earnings estimate revisions, providing a more accurate prediction of future stock prices [13]. Group 4: Current Earnings Estimates for STRL - The Zacks Consensus Estimate for Sterling Infrastructure remains unchanged at $10.43 for the current year, indicating steady analyst views on the company's earnings prospects [14]. - Due to the unchanged consensus estimate and other factors, Sterling Infrastructure holds a Zacks Rank 3 (Hold), suggesting caution despite the Buy-equivalent ABR [15].

Company Overview - Sterling Infrastructure, Inc. (STRL) is currently trading at a forward 12-month Price/Earnings ratio (P/E F12M) of 27.26, which is approximately 15.8% higher than the Zacks Engineering - R and D Services industry average of 23.54 [2] - The stock has surged 95% over the past year, significantly outperforming the industry's growth of 8.3% and the broader Construction sector's increase of 4.8% [7] Industry Environment - The U.S. infrastructure construction environment is supported by steady public and private investments across various sectors, including transportation and energy infrastructure [3] - Recent interest-rate cuts by the Federal Reserve have improved financial conditions for large projects, enhancing funding visibility [3] Operational Performance - Sterling is experiencing continued strength in its core operations, particularly in E-Infrastructure, driven by demand for data centers and industrial work [4] - The company's backlog reached $2.6 billion in Q3, reflecting a 64% year-over-year increase, with total potential work exceeding $4 billion [15] Growth Drivers - The E-Infrastructure segment is a key growth area, with revenues from data centers increasing over 125% year-over-year in Q3 [9][13] - The company is expanding into new geographic markets, targeting regions expected to see increased mission-critical activity over the next two to three years [16][17] Market Position - Sterling's valuation is considered high compared to peers like AECOM, Fluor Corporation, and KBR, which have lower forward P/E ratios [6] - Despite the high valuation, analysts have revised earnings per share (EPS) estimates upward, indicating confidence in the stock's growth potential [20] Future Outlook - The company expects continued momentum in data centers and a strong pipeline of new projects, supporting growth through 2026 [13][20] - E-commerce and manufacturing are anticipated to remain significant contributors to Sterling's mission-critical portfolio, supporting longer project durations and margin stability [19]

Core Insights - Sterling Infrastructure, Inc. (STRL) is experiencing significant growth driven by data center-related site development and mission-critical projects, which yield higher margins due to their complexity and execution certainty [1][4] - The company’s disciplined project selection and focus on negotiated contracts help maintain margins despite increasing volumes, supported by strong cost controls and experienced teams [2] - The recent acquisition of CEC enhances Sterling's electrical capabilities, increasing self-perform content and cross-selling opportunities, which are expected to be margin-accretive [3] Financial Performance - In Q3 2025, revenues from the data center market surged by 125% year over year, with the E-Infrastructure segment's revenues increasing by 58% [1][7] - Earnings estimates for 2025 and 2026 have been revised upward, reflecting a projected year-over-year growth of 71% and 14.6%, respectively [5][6] Market Position - STRL's stock has outperformed its peers, gaining 29.4% over the past six months, significantly exceeding the performance of the Zacks Engineering - R and D Services industry and the broader Construction sector [7] - The company is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 29.35, which is higher than competitors like Granite Construction (19.16) and KBR (10.55) [11][12]

Core Insights - The U.S. housing industry is facing significant pressure due to affordability issues, impacting companies like Sterling Infrastructure, Inc. (STRL) [1][6] - STRL's Building Solutions segment experienced a 1% decline in revenues year over year, with legacy residential revenues falling by 17% [1][6] - The Federal Reserve's recent interest rate cut of 0.25 percentage points has provided limited relief, as high mortgage costs and tight supply continue to suppress demand [1] Group 1: E-Infrastructure Growth - STRL's E-Infrastructure Solutions segment, which serves critical projects like data centers, reported revenues of $417.1 million in Q3 2025, reflecting a 58% year-over-year growth [2][6] - This segment accounts for approximately 60% of STRL's total revenues, indicating strong demand and significant customer investments [2][3] - The company has a signed backlog of $2.6 billion, up 64% from the previous year, with E-Infrastructure representing the majority of this pipeline [3][6] Group 2: Market Performance and Valuation - STRL's stock has increased by 37.2% over the past six months, outperforming the Zacks Engineering - R and D Services industry's growth of 1% [4][7] - The stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 26.51, which is a premium compared to peers like AECOM, Fluor, and KBR [7][9] - Earnings estimates for STRL for 2026 have risen to $11.95 per share, indicating a 14.6% year-over-year growth [9][10]

Core Insights - The U.S. infrastructure construction sector is experiencing robust growth due to sustained public and private investments, particularly in transportation, utilities, and energy infrastructure [1] - Sterling Infrastructure, Inc. (STRL) is well-positioned in this favorable environment, benefiting from easing financial conditions and a strong project pipeline [1][5] Group 1: Backlog and Pipeline - Sterling's signed backlog reached approximately $2.6 billion in Q3 2025, marking a 64% year-over-year increase, with total potential work exceeding $4 billion when including negotiated but unsigned awards [3][7] - The company's exposure to large, complex projects in E-Infrastructure, manufacturing, and data centers enhances workload durability and planning efficiency [2][3] Group 2: Operational Efficiency - The scale and complexity of current projects allow Sterling to improve labor planning, equipment utilization, and work sequencing, which are critical for consistent execution [4] - Long-term customer planning and committed capital spending from large enterprise clients further reduce uncertainty around project timing [4] Group 3: Market Performance - STRL shares have surged 37.7% over the past six months, significantly outperforming the Zacks Engineering - R and D Services industry's growth of 2.5% [6] - The company's forward 12-month price-to-earnings (P/E) ratio stands at 26.5, indicating a premium compared to industry peers like AECOM, Fluor, and KBR [8][10] Group 4: Earnings Estimates - Earnings estimates for STRL for 2026 have increased to $11.95 per share, reflecting a 14.6% year-over-year growth [10] - The company currently holds a Zacks Rank 1 (Strong Buy), indicating strong market confidence [11]