Sterling vs. Granite: Which Infrastructure Stock Is the Better Buy?

Core Insights - Persistent public funding and strong private market demand are driving the U.S. civil construction sector, benefiting companies like Sterling Infrastructure, Inc. (STRL) and Granite Construction Incorporated (GVA) [1][2] - Both companies are focusing on selective bidding, margin growth, and operational efficiency as part of their long-term strategies [1][2] Company Overview: Sterling Infrastructure, Inc. (STRL) - STRL is experiencing robust demand in transportation, utilities, and mission-critical site development, particularly in data centers and industrial expansion [4] - The E-Infrastructure platform is a key growth driver, with data center project revenues increasing over 125% year-over-year and a signed backlog of $2.6 billion, up 64% year-over-year [5] - The company anticipates sustained growth through 2026, supported by a strong pipeline in data centers and manufacturing [7] Company Overview: Granite Construction Incorporated (GVA) - GVA benefits from strong public infrastructure demand, focusing on high-quality projects and best-value contract structures to mitigate risks [8] - The company reported a record $7 billion in CAP, a 31.6% year-over-year increase, with construction segment revenues rising 14% year-over-year to $940 million [9][10] - GVA expects continued revenue growth and margin expansion, supported by its high-quality CAP mix and disciplined capital allocation [12] Stock Performance & Valuation - STRL's share price has outperformed GVA and the broader construction sector over the past six months [13] - STRL is trading at a premium valuation compared to GVA, which is experiencing slower growth [15][17] Earnings Estimates - STRL's 2026 EPS estimate has increased to $12.25, reflecting a 17.2% year-over-year growth expectation [18] - GVA's 2026 EPS estimate has decreased to $6.35, indicating a 16.2% year-over-year growth expectation [19] Investment Comparison - STRL is positioned for higher growth tied to mission-critical developments, while GVA offers stability through public transportation and civil works [20] - STRL shows stronger earnings momentum with upward revisions to EPS estimates, contrasting with GVA's lower estimates [21] - STRL holds a Zacks Rank 2 (Buy), while GVA has a Zacks Rank 4 (Sell), making STRL the more attractive option for investors seeking growth [22]