Sterling Infrastructure (STRL) is a Construction Company Building Datacenters

/ By / STRL
Stock (Symbol)

Sterling Infrastructure (STRL)
Stock Price

$470
Sector
Industrials & Energy
Data is as of
August 31, 2026
Expected to Report
November 2
Company Description
Sterling Infrastructure, Inc. operates through a variety of subsidiaries, specializing in E-Infrastructure, Transportation and Building Solutions in the United States.

Its segments include E-Infrastructure Solutions, Transportation Solutions, and Building Solutions.

The E-Infrastructure Solutions segment is a provider of large-scale specialty site infrastructure improvement contracting services in the Southeastern, Northeastern and Mid-Atlantic United States. It serves large, blue-chip end users in the e-commerce, data center, distribution center, warehousing, energy sectors and more.

The Transportation Solutions segment is comprised of heavy highway, aviation, and rail, and relies heavily on federal and state infrastructure spending. The principal markets of this segment are Arizona, Colorado, Hawaii, Nevada, Texas, and Utah.

The Building Solutions segment is comprised of its residential and commercial businesses. It focuses on concrete construction of multifamily foundations. Source: Refinitiv
Sharek’s Take
David Sharek Sterling Infrastructure (STRL) reported incredibly strong performance last quarter, as the construction company delivered 116% profit growth on a 90% increase in revenue. Why is STRL growing so fast? It builds Datacenters. Last qtr’s Growth was led by its E-Infrastructure Solutions segment, which had exceptional 192% revenue growth. This was supported by the continued strength in large mission-critical projects, including data center market, which also helped gross margin expansion. Sterling Infrastructure’s signed backlog also jumped 116% year-over-year, providing strong visibility into future revenue growth. But some of the backlog is due to acquisitions. Backlog increased 50% yoy excluding recent acquisitions COC and Stone Ridge.

Sterling Infrastructure is a construction company that works with heavy machinery to tackle huge construction projects, like expanding highways and building water infrastructure. It is a heavy civil construction company founded in 1955 and based in Texas. The company’s building projects include roadways, airports, office and residential areas, highway rest stops, and schools. Although these projects are good for revenue, civil construction has low-profit margins. In 2016, management dedicated itself to growing high-margin projects and expanding into other markets. STRL has extended its services to building high-tech data centers, as well as e-commerce structures, including warehouses and distribution centers for clients such as Amazon, Facebook, Home Depot and FedEx.

Today, Sterling Infrastructure has three business segments:

  1. E-Infrastructure Solutions
    • 192% revenue growth last quarter, 78% of total company sales.
    • Large-scale development for data centers, ecommerce, distribution centers, and power generation, as well as site development and electrical & mechanical services for large, mission-critical projects.
    • Ended last quarter with a signed backlog of $3.3 billion, an increase of $1.5 billion since year-end 2025. Large mission-critical projects accounted for 92% of the total signed backog.
    • Growth was mainly driven by large mission-critical projects, including work on data centers and semiconductor campuses.
    • CEC Facilities Group (CEC) grew revenue 140% year over year and secured additional project wins, increasing combined backlog by $1.7 billion since year-end 2025.
  2. Transportation Solutions
    • -20% revenue growth last quarter, 13% of total company sales.
    • Infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail and storm drainage systems, primarily in the Rocky Mountain states and Texas.
    • Ended last quarter with 35% year-over-year increase in backlog.
    • The decline in revenue reflected the ongoing reallocation of resources from transportation projects to higher-margin infrastructure projects.
  3. Building Solutions
    • -1% revenue growth last quarter, 9% of total company sales.
    • Residential and commercial concrete slabs, plumbing and surveying
    • Last quarter’s performance showed relatively flat homebuilder activity.

Sterling Infrastructure has an Estimated Long Term Growth Rate (Est. LTG) of just 11% but profits have been growing at a much faster rate. Profit growth has grown at triple-digit rates the past two quarters. STRL does not pay a dividend, but does buy back stock using an opportunistic approach. STRL is way off its highs and I will use the weakness to buy in for the Growth Portfolio at a good price.
One Year Chart
STRL stock has gone from around $300 to ~$1000 and back down to ~$500 this year. Shares jumped from $529 to $806 on May 5, the day after the company reported earnings 2QtrsAgo. The stock is down due to AI stocks taking a breather on news communities don’t want datacenters due to the electricity drain.

This quarter’s P/E of 26, down from 30 last qtr.

The Est. LTG is just 11%. I think that’s way too low.

Quarterly profit growth has been strong the past two quarters, driven by higher profit margins.  And Estimates for the next two quarters look great!
Earnings Table
Last quarter, Sterling Infrastructure delivered profit growth of 116% and beat estimates of 88%. Revenue grew 90%. Gross margin increased to 24.8% from 23.3% a year ago as the company continued to shift its portfolio toward higher value, mission-critical projects. Operating margin was 18.8%, up from 17.0% a year ago.

  • Last quarter’s signed backlog jumped 116% and combined backlog surged 150% from the year ago period. Combined backlog is Sterling Infrastructure’s signed contractual work plus awarded but not-yet-signed projects that it expects to convert into formal backlog.
  • Management expects E-Infrastructure revenue to grow more than 100% in 2026, supported by sustained demand for large-scale mission-critical infrastructure — particularly datacenters — in the coming years.
  • Transportation Solutions revenue is seen to decline by around 9% as Sterling Infrastructure accelerates its shift of resources toward E-Infrastructure projects.
  • Building Solutions revenue is expected to decline modestly in 2026, as management anticipates continued headwinds in the residential market.

Annual Profit Estimates are up this quarter. Considering Sterling Infrastructure’s strong performance to date, management raised its 2026 guidance to 64% revenue growth. 

Quarterly Profit Estimates are 89%, 73%, 26% and 36% profit growth in the next 4 quarters. Analysts think revenue will grow 71% next quarter.
Fair Value
This company really pulled it together in 2020 as profits jumped 69% to record highs of $1.52 per share. STRL has been in a groove since.

With the stock at $470 this quarter, it has a P/E of 26. 

My Fair Value is a P/E of 30, which equates to $545 a share. This gives the stock an upside of 16%. 

Looking ahead to 2027, STRL has 52% upside in my opinion.
Bottom Line
Sterling Infrastructure (STRL) has a pretty ten-year chart, but that hasn’t always been the case. What’s not shown here is between 2003 and 2005 the stock went from $2 to $25. That’s a big move in a short period of time. STRL set an all-time high of $33 in 2006, then trended lower until it sank to $2 in 2015. Management’s decision to evolve into other areas of construction turned the stock around.

I dropped the ball by not buying in when the stock went from $200 to $100 in early 2025, then again when STRL fell from $400 to $300 in late 2025. Now the stock is well off its highs once again. And I’m buying in.

STRL will be purchased on Tuesday for the Growth Portfolio, and rank 26th in the Power Rankings. Monday is Labor Day, thus the stock market is closed. 
Power Rankings
Growth Stock Portfolio

26 of 32

Focus List

N/A

Conservative Stock Portfolio

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