Sterling Infrastructure Surges: A Deep Dive into Recent Performance
In the midst of a wider post-election stock rally, Sterling Infrastructure STRL stands out with remarkable progress.
With shares rising over 120% year-to-date, STRL reached a new peak of $201 during Monday’s trading. Investors now wonder if this upward trend will continue.
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Strong Growth Following Stellar Q3 Results
Sterling’s growth has been fueled by mission-critical projects, including those in the data center sector. The company reported significant Q3 results last Wednesday, achieving a 89% increase in operating income within its E-Infrastructure solutions segment. Additionally, net income rose 56% to $61.3 million, equaling $1.97 per share, up from $1.26 in the same period last year.
Sterling surpassed Q3 EPS estimates of $1.68, marking the seventh consecutive quarter of exceeding earnings expectations. The average EPS surprise over the last four quarters stands at 21.5%. Though the company’s Q3 sales reached $593.74 million, they missed expectations of $599.9 million; however, this figure represents a 6% increase from $560.35 million the previous year.
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Key Financial Highlights
Other notable Q3 achievements include a 42% increase in EBITDA, totaling $100.8 million, along with record gross margins of 21.9%, compared to 16.4% from a year prior. Sterling’s cash and equivalents also jumped by 42% to $648.12 million, up from $409.39 million at the end of Q3 2023.
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Evaluating Sterling’s Valuation
Sterling’s impressive growth has helped distinguish it from competitors. Currently, STRL trades at 32.4 times its forward earnings. This valuation is not excessively high compared to the industry average of 25.8 times.
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Revised Earnings Projections
Earnings estimates for fiscal 2024 and 2025 have recently been revised upward by 5% and 1%, respectively. According to Zacks estimates, Sterling is on track to achieve 33% EPS growth this year, with an additional projected growth of 2% in fiscal 2025, bringing EPS to $6.11.
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Conclusion
With a positive trend in earnings revisions, Sterling Infrastructure is currently rated with a Zacks Rank #1 (Strong Buy).
As one of the standout stocks of recent years, it is reasonable to expect STRL may continue its upward trajectory. Furthermore, Sterling boasts a robust backlog exceeding $2 billion and is actively pursuing significant multi-phase infrastructure projects.
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Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
