Can Sterling's E-Infrastructure Strength Offset Housing Drag in 2026?

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]