Can Sterling Sustain 25% Gross Margin Streak as Projects Scale Up?

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]