Core Insights - Sterling Infrastructure, Inc. (STRL) shares are trading at a forward 12-month price-to-earnings (P/E) ratio of 25.29, which is approximately 19.5% higher than the Zacks Engineering - R and D Services industry average of 21.16, indicating a premium valuation compared to its five-year median [1][3]. Financial Performance - STRL stock has gained 35.8% year-to-date, outperforming the industry average increase of 8.1% and the S&P 500's rise of 5.4% [5]. - Data center-related revenues surged nearly 60% in the first quarter of 2025, contributing significantly to the E-Infrastructure performance [7][10]. - The total backlog for STRL increased by 17% year-over-year to $2.1 billion, with $1.2 billion attributed to E-Infrastructure, indicating strong future growth potential [11][12]. Market Position and Demand Drivers - The company is benefiting from stable demand in E-Infrastructure, driven by trends in Artificial Intelligence and digital transformation, which supports its premium valuation [9]. - The Transportation Solutions segment is also positioned for growth, with a backlog of $861 million, up 11% year-over-year, supported by ongoing federal investment under the Infrastructure Investment and Jobs Act (IIJA) [14][15]. Strategic Expansion - Sterling Infrastructure is expanding its E-Infrastructure platform through acquisitions, including a recent agreement to acquire CEC Facilities Group for $505 million, which is expected to enhance its service offerings and market presence [17][18]. - The acquisition is anticipated to create cross-selling opportunities and support the company's long-term growth strategy [18]. Earnings Estimates and Analyst Outlook - Earnings estimates for STRL have been revised upward to $8.61 per share for 2025, reflecting a growth of 41.2% year-over-year, while peer companies are expected to see lower growth rates [21]. - The company's strong fundamentals and strategic focus on high-growth sectors justify investor confidence despite its high valuation [20][21].

Market Overview - Markets ended higher on Wednesday, with the S&P 500 and Nasdaq Composite indices advancing by 0.47% and 0.94%, respectively, while the Dow Jones Industrial Average dropped by 10.52 points [1] - Market sentiment was positively influenced by a trade accord between the United States and Vietnam, easing concerns over prolonged trade tensions [1] Economic Indicators - A recent ADP report indicated an unexpected drop in private payrolls for June, with the private sector losing 33,000 jobs, suggesting potential challenges for the U.S. economy [2] - This decline in job numbers has raised scrutiny from investors, particularly in light of the Federal Reserve's cautious stance on interest rates [2] Investment Strategy - In the current macroeconomic environment, focusing on companies with strong financial fundamentals is crucial [3] - Relying solely on sales and earnings metrics may not yield long-term returns; a deeper analysis of a company's financial health and stability is essential for sustainable investment growth [3] Financial Analysis - A critical analysis of a company's financial background, including coverage ratios, is necessary for informed investment decisions [4] - The Interest Coverage Ratio is a key indicator used to evaluate a company's ability to pay interest on its debt, ensuring it is not over-leveraged [4][6] Interest Coverage Ratio Insights - The Interest Coverage Ratio is calculated as Earnings before Interest & Taxes (EBIT) divided by Interest Expense [5] - A ratio lower than 1.0 indicates a company may struggle to meet its interest obligations, while a higher ratio suggests a stronger financial position [9] Company Performance - Hudbay Minerals Inc. (HBM), Sterling Infrastructure, Inc. (STRL), Molina Healthcare, Inc. (MOH), and Vertiv Holdings Co (VRT) have strong interest coverage ratios, indicating solid financial footing [10] - HBM and STRL posted over 40% EPS growth estimates, while VRT shows a growth potential of 24.9% [10] - MOH projects 8.4% sales growth and 7.9% EPS growth, despite a 19.3% stock decline over the past year [10] Stock Screening Criteria - Stocks should have an Interest Coverage Ratio greater than the industry average, a favorable Zacks Rank, and a VGM Score of A or B for better investment results [11] - Additional criteria include a minimum stock price of $5, strong historical and projected EPS growth, substantial trading volume, and a Zacks Rank of 1 or 2 [12][13] Company Highlights - Hudbay Minerals has a trailing four-quarter earnings surprise of 50% on average, with a Zacks Consensus Estimate suggesting growth of 9.2% in sales and 41.7% in EPS [14] - Sterling Infrastructure has a trailing four-quarter earnings surprise of 11.5% on average, with a projected EPS growth of 41.2% [15] - Molina Healthcare's Zacks Consensus Estimate indicates growth of 8.4% in sales and 7.9% in EPS [16] - Vertiv Holdings has a trailing four-quarter earnings surprise of 10.4% on average, with projected growth of 18.8% in sales and 24.9% in EPS [17]

Market Overview - Wall Street ended the first day of July 2025 on a mixed note, with the S&P 500 and Nasdaq falling while the Dow Jones Industrial Average gained slightly [1] - The contrasting movements in the major stock indices were influenced by opposing forces, including a feud between President Trump and Tesla CEO Elon Musk, and the U.S. Senate's passage of Trump's tax bill aimed at stimulating economic growth [2] Investment Opportunities - Amid market uncertainty, there is a potential opportunity to invest in low-leverage stocks that are not expensive and can provide a protective shield during turbulent times [3] - Suggested low-leverage stocks include Novartis (NVS), Alamo Group (ALG), ArcelorMittal (MT), Bilibili (BILI), and Sterling Infrastructure, Inc. (STRL) [3][10] Low-Leverage Stocks - Low-leverage stocks are characterized by a lower debt-to-equity ratio, indicating reduced financial risk and improved solvency [7][8] - Investing in low-leverage stocks is recommended to avoid significant losses during economic downturns [6][7] Company Highlights - **Novartis (NVS)**: Recently completed the acquisition of Regulus Therapeutics, enhancing its drug portfolio. The Zacks Consensus Estimate for NVS's 2025 sales suggests a 7.3% improvement from 2024, with a long-term earnings growth rate of 7.9% [15][16] - **Alamo Group (ALG)**: Completed the acquisition of Ring-O-Matic, expanding its product offerings. The Zacks Consensus Estimate for ALG's 2025 earnings indicates a 7.2% year-over-year improvement [17][18] - **ArcelorMittal (MT)**: Signed an agreement to sell operations in Bosnia and Herzegovina, allowing a focus on higher-growth areas. The company has a long-term earnings growth rate of 49.8% [19] - **Bilibili (BILI)**: Reported a 24% year-over-year revenue increase and a 58% improvement in gross profit for Q1 2025. The Zacks Consensus Estimate for its 2025 sales indicates a 12.1% improvement from 2024 [20][21] - **Sterling Infrastructure (STRL)**: Announced the acquisition of CEC Facilities Group, enhancing its service portfolio in high-growth markets. The company has a long-term earnings growth rate of 15% [22][23]

Core Insights - Sterling Infrastructure, Inc. (STRL) is experiencing growth due to a strong backlog and expanding pipeline in its E-Infrastructure Solutions segment, with a backlog of $1.2 billion as of March 31, 2025, representing a 27% year-over-year increase [1][9] - The company has reached the high end of its $750 million target for future-phase opportunities, bringing total visibility close to $2 billion [1] - The demand for data-center construction, driven by artificial intelligence (AI), accounts for over 65% of the E-Infrastructure backlog, with revenues from these projects increasing approximately 60% year-over-year [2][9] Company Performance - Sterling expects mid-to-high teens revenue growth for the E-Infrastructure segment in 2025, with operating margins projected in the mid-20% range [4][9] - The company acknowledges potential shifts in customer timelines and funding schedules, emphasizing the importance of maintaining high conversion rates from identified opportunities into booked backlog [3] Industry Trends - Other companies like Comfort Systems USA (FIX) and EMCOR Group, Inc. (EME) are also expanding their presence in digital infrastructure, benefiting from long-term trends in AI-driven construction [5] - Comfort Systems reported a record first-quarter 2025 with earnings up more than 75% and revenues rising 19% year-over-year, with a backlog of $6.9 billion [6] - EMCOR's Remaining Performance Obligations reached $11.75 billion, indicating a 28.1% year-over-year growth, supported by strong public infrastructure spending in the U.S. [7] Stock Performance and Valuation - Sterling's stock has surged 102.4% in the past three months, outperforming the Zacks Engineering - R and D Services industry, which rose 35.6% [8] - The company is currently trading at a price-to-earnings ratio of 24.61X, compared to the industry's average of 21.01X [11] - The Zacks Consensus Estimate for Sterling's EPS indicates year-over-year growth of 41.2% for 2025 and 10.1% for 2026 [13]

Core Viewpoint - The article emphasizes the importance of identifying and sustaining trends in short-term investing, highlighting that sound fundamentals and positive earnings estimates are crucial for maintaining momentum in stock prices [1]. Group 1: Stock Performance - Sterling Infrastructure (STRL) has shown a significant price increase of 95.5% over the past 12 weeks, indicating strong investor interest [3]. - The stock has also increased by 14.6% in the last four weeks, suggesting that the upward trend is still intact [4]. - STRL is currently trading at 91.1% of its 52-week high-low range, indicating a potential breakout [4]. Group 2: Fundamental Strength - STRL holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [5]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [6]. Group 3: Investment Strategy - The article suggests that investors can utilize the "Recent Price Strength" screen to identify stocks like STRL that are on an uptrend with strong fundamentals [2]. - It also mentions that there are over 45 Zacks Premium Screens available for investors to find potential winning stock picks based on their investing style [7].

Company Performance - Sterling Infrastructure (STRL) closed at $222.54, reflecting a -3.55% change from the previous day, which is less than the S&P 500's daily loss of 0.11% [1] - Prior to the latest trading session, STRL shares had increased by 21.69%, outperforming the Construction sector's gain of 3.97% and the S&P 500's gain of 5.17% [1] Upcoming Earnings - The upcoming earnings release is expected to show an EPS of $2.26, representing a 35.33% increase compared to the same quarter last year [2] - Revenue is anticipated to be $555.13 million, indicating a 4.75% decline compared to the year-ago quarter [2] Annual Forecast - Zacks Consensus Estimates project earnings of $8.61 per share and revenue of $2.09 billion for the year, reflecting changes of +41.15% and -1.22% respectively compared to the previous year [3] - Recent changes to analyst estimates may indicate shifting near-term business trends, with positive revisions suggesting analyst optimism about the company's profitability [3] Analyst Ratings - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently ranks Sterling Infrastructure at 2 (Buy) [5] - The consensus EPS projection has remained stable over the past 30 days, indicating consistent analyst sentiment [5] Valuation Metrics - Sterling Infrastructure has a Forward P/E ratio of 26.81, which is a premium compared to the industry average Forward P/E of 20.46 [6] - The company also has a PEG ratio of 1.79, slightly above the Engineering - R and D Services industry average PEG ratio of 1.76 [7] Industry Context - The Engineering - R and D Services industry is part of the Construction sector and holds a Zacks Industry Rank of 97, placing it in the top 40% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Insights - Sterling Infrastructure (NASDAQ: STRL) is facing challenges with a double-digit revenue decline, particularly in the transportation segment, as it moves into 2025 [1] Company Performance - The transportation segment is expected to continue experiencing revenue growth pressure in the near term [1]

Core Insights - Sterling Infrastructure, Inc. (STRL) is focusing on large-scale mission-critical projects, particularly data centers, which are enhancing its revenue visibility and bottom line [1][2] - The favorable market conditions for public infrastructure demand, supported by government initiatives like the Infrastructure Investment and Jobs Act (IIJA), CHIPS Act, and Inflation Reduction Act (IRA), are driving STRL's strategic shift [1] - STRL's earnings per share (EPS) growth is strong, with a reported 29.4% year-over-year increase in Q1 2025, and an adjusted operating margin expansion of 618 basis points [1] Financial Performance - The E-Infrastructure segment's backlog grew by 27% year-over-year to $1.2 billion, with data center-related work constituting over 65% of this backlog [2] - STRL's total backlog reached $2.13 billion at the end of Q1 2025 [2] - The company raised its 2025 adjusted EPS guidance to a range of $8.40-$8.90, reflecting an 18.5-25.5% year-over-year growth [3] Analyst Sentiment - Analysts are bullish on STRL due to increased public infrastructure demand, with 2025 earnings estimates trending upward to $8.61 per share, indicating a 41.2% year-over-year growth [4][7] - EPS estimates for the second, third, and fourth quarters of 2025 suggest year-over-year growth rates of 35.3%, 32.5%, and 43.8%, respectively [5] Market Position - STRL shares are performing well, gaining 35.7% year-to-date, outperforming the Zacks Engineering - R and D Services industry and the broader S&P 500 index [11] - The stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 25.32X, indicating a premium valuation compared to industry peers, reflecting strong market potential [12]

Financial Highlights - The company's market capitalization was $5.77 billion as of June 2, 2025 [13] - The company reported 2024 revenue of $2.12 billion [13] - The company's 2024 adjusted EBITDA was $329 million, with a 15.1% margin [13] - The company had a net cash position of $329 million as of March 31, 2025 [13] Growth and Strategy - The company is focused on high-margin growth, strategic market expansion, and operational excellence [5] - The company's backlog includes approximately $750 million of future phases of work associated with current projects [26] - The company's Q1 2025 revenue was $430.9 million [57] - The company's Q1 2025 adjusted EBITDA was $80.3 million [57] Segment Performance - E-Infrastructure Solutions revenue was $924 million in 2024, with a 22.0% operating margin [38] - Transportation Solutions revenue was $784 million in 2024, with a 6.5% operating margin [45, 46] - Building Solutions revenue was $408 million in 2024, with a 13.2% operating margin [52] 2025 Guidance - The company projects full year 2025 revenue between $2.05 billion and $2.15 billion [69] - The company projects full year 2025 adjusted EBITDA between $410 million and $432 million [69]

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