Sterling Stock Soars 45% in 6 Months: Should You Buy, Sell or Hold?

Core Insights - Sterling Infrastructure, Inc. (STRL) shares have increased by 44.5% over the past six months, outperforming the Zacks Engineering – R&D Services industry's growth of 12.5% and the broader Construction sector and S&P 500, which grew by 12.6% and 11.1%, respectively [1][4]. Group 1: Growth Drivers - Favorable U.S. infrastructure spending is supporting Sterling's growth, driven by consistent public and private investments in transportation, utilities, and energy projects [2][10]. - Easing interest rates have improved funding visibility, encouraging new project starts, particularly in mission-critical site development such as data centers, e-commerce, and industrial facilities [2][19]. - The E-Infrastructure segment is experiencing strong growth, with revenues from data centers increasing over 125% year-over-year in Q3 [7][8]. Group 2: Backlog and Pipeline - Sterling reported a signed backlog of $2.6 billion, which is a 64% increase year-over-year, with total potential work exceeding $4 billion, providing revenue visibility through 2026 [10][9]. - The company has a diverse pool of work across E-Infrastructure, manufacturing, data centers, and e-commerce, reflecting strong customer relationships and ongoing capital commitments [9][10]. Group 3: Market Position and Performance - Sterling has outperformed competitors such as AECOM, Fluor Corporation, and KBR, which saw declines of 4.9%, 3.8%, and 20.4%, respectively, over the same period [5][6]. - The company is benefiting from rising demand in e-commerce and manufacturing, with e-commerce-related backlog increasing by more than 150% as customers expand fulfillment networks [11][12]. Group 4: Earnings Estimates - The earnings estimate for Sterling in 2026 remains unchanged at $11.95 per share, indicating a year-over-year growth of 14.6% on projected revenue growth of 19.1% [13][14]. Group 5: Valuation - STRL stock is currently trading at a forward P/E ratio of 34.05, which is higher than peers such as AECOM, Fluor, and KBR, which have forward P/E ratios of 17.59, 21.1, and 10.46, respectively [17][18].