Sterling Infrastructure, Inc. (STRL) is Attracting Investor Attention: Here is What You Should Know

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.

That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.

However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Sterling Infrastructure (STRL) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank.

Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.

Here are three of the most important factors that make the stock of this civil construction company a great growth pick right now.

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Sterling Infrastructure is 43.1%, investors should actually focus on the projected growth. The company's EPS is expected to grow 33.3% this year, crushing the industry average, which calls for EPS growth of 13.4%.

Cash Flow Growth

While cash is the lifeblood of any business, higher-than-average cash flow growth is more important and beneficial for growth-oriented companies than for mature companies. That's because, growth in cash flow enables these companies to expand their businesses without depending on expensive outside funds.

Right now, year-over-year cash flow growth for Sterling Infrastructure is 31.6%, which is higher than many of its peers. In fact, the rate compares to the industry average of 9.5%.

While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 34.5% over the past 3-5 years versus the industry average of 3.6%.

Promising Earnings Estimate Revisions

Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for Sterling Infrastructure have been revising upward. The Zacks Consensus Estimate for the current year has surged 5.4% over the past month.

Bottom Line

While the overall earnings estimate revisions have made Sterling Infrastructure a Zacks Rank #1 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination indicates that Sterling Infrastructure is a potential outperformer and a solid choice for growth investors.

Zacks Investment Research

Shares of Sterling Infrastructure (STRL) have been strong performers lately, with the stock up 27.5% over the past month. The stock hit a new 52-week high of $203.49 in the previous session. Sterling Infrastructure has gained 126.4% since the start of the year compared to the 29.7% move for the Zacks Construction sector and the 19.2% return for the Zacks Engineering - R and D Services industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 6, 2024, Sterling Infrastructure reported EPS of $1.97 versus consensus estimate of $1.68.

For the current fiscal year, Sterling Infrastructure is expected to post earnings of $5.96 per share on $2.15 billion in revenues. This represents a 33.33% change in EPS on a 9.02% change in revenues. For the next fiscal year, the company is expected to earn $6.45 per share on $2.31 billion in revenues. This represents a year-over-year change of 8.14% and 7.34%, respectively.

Valuation Metrics

Sterling Infrastructure may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Sterling Infrastructure has a Value Score of D. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 33.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 23.6X. On a trailing cash flow basis, the stock currently trades at 31X versus its peer group's average of 17X. Additionally, the stock has a PEG ratio of 2.23. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Sterling Infrastructure currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Sterling Infrastructure fits the bill. Thus, it seems as though Sterling Infrastructure shares could have a bit more room to run in the near term.

How Does STRL Stack Up to the Competition?

Shares of STRL have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is M-tron Industries, Inc. (MPTI). MPTI has a Zacks Rank of # 2 (Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of C.

Earnings were strong last quarter. M-tron Industries, Inc. beat our consensus estimate by 50%, and for the current fiscal year, MPTI is expected to post earnings of $2.35 per share on revenue of $48.8 million.

Shares of M-tron Industries, Inc. have gained 26% over the past month, and currently trade at a forward P/E of 26.93X and a P/CF of 42.75X.

The Engineering - R and D Services industry may rank in the bottom 59% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for STRL and MPTI, even beyond their own solid fundamental situation.

Zacks Investment Research

Summit Materials, Inc. SUM has announced that will be acquired by Quikrete Holdings, Inc. for $11.5 billion (including debt), which highlights $52.50 per share in cash.

The company stated that the acquisition agreement will deliver significant, immediate and certain cash value to its shareholders. Also, it believes that this transaction will offer opportunities for its employees and customers.

Upon the announcement, the SUM stock lost 1.8% during the trading hours and edged down 0.1% in the after-hours on Monday.

Details of SUM’s Agreement With Quikrete

The strategic transaction will amalgamate Summit’s aggregates, cement and ready-mix concrete businesses with Quikrete's concrete and cement-based products business. This will result in a vertically integrated North American construction materials solutions provider.

The transaction price represents about 36% premium to Summit's unaffected 90-day volume weighted average price and an approximately 29% premium to its unaffected share price. This combination was collaboratively approved by the board of directors of Summit and Quikrete.

The closure of the acquisition is expected in the first half of 2025, subject to regulatory approvals and other customary closing conditions. After being acquired by Quikrete, Summit will become its privately held subsidiary and its common stock will no longer be traded on the NYSE.

SUM Stock’s Price Performance

Shares of this producer of aggregates and cement have gained 30.1% in the past three months, outperforming the Zacks Building Products - Concrete and Aggregates industry’s 13.6% growth. The company’s prospects are strengthened by its disciplined portfolio optimization approach, asset-light principles and value pricing strategy.

The improving trend is clear from SUM’s estimate revision trend as well. The Zacks Consensus Estimate for fourth-quarter and 2024 earnings per share (EPS) indicates 35.5% and 3.8% year-over-year growth. The company also delivered a trailing four-quarter earnings surprise of 19.1%, on average.

SUM’s Zacks Rank & Key Picks

Summit currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Construction sector.

Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

It has a trailing four-quarter earnings surprise of 21.5%, on average. Shares of STRL have risen 55.6% in the past six months. The Zacks Consensus Estimate for STRL’s 2024 sales and earnings per share (EPS) implies an increase of 9% and 33.3%, respectively, from the prior-year levels.

Louisiana-Pacific Corporation LPX currently flaunts a Zacks Rank of 1. LPX delivered a trailing four-quarter earnings surprise of 30.7%, on average. The stock has gained 31.9% in the past six months.

The Zacks Consensus Estimate for LPX’s 2024 sales and EPS indicates an increase of 12.7% and 72.1%, respectively, from a year ago.

MasTec, Inc. MTZ presently sports a Zacks Rank of 1. MTZ delivered a trailing four-quarter earnings surprise of 40.2%, on average. The stock has gained 29.6% in the past six months.

The Zacks Consensus Estimate for MTZ’s 2024 sales and EPS indicates an increase of 1.9% and 84.3%, respectively, from a year ago.

Zacks Investment Research

Sterling Infrastructure, Inc. STRL, a mid-cap company, in the Zacks Engineering - R and D Services industry, has caught the attention of Wall Street with an impressive 67.2% surge in its stock price over the past three months.

This rally has outpaced the industry, the broader Zacks Construction sector and the S&P 500 respectively, leading many investors to question whether the stock is still a good buy or if the rally has run its course.

Sterling, a premier U.S. service provider specializing in transportation, civil construction, and e-infrastructure solutions, is leveraging favorable secular trends in North America's expanding infrastructure market, fueled by increased government funding and rising private sector investments. STRL's E-Infrastructure Solutions segment, which emphasizes data centers and advanced manufacturing projects, has emerged as its largest revenue driver, delivering substantial improvements in operating margins.

Sterling Stock 3-Month Share Performance

KBR, Inc. KBR has inked a deal with AMUFERT to provide a technology license, proprietary engineering design, equipment and catalyst solutions for the latter’s 2,300 metric tons per day ammonia plant in Soyo, Angola.

The new facility will support Angola and nearby countries to accelerate sustainable agriculture with the help of KBR's proprietary technologies and expertise in ammonia. This will support AMUFERT's efforts toward greater food security and self-sufficiency in Angola.

KBR is a global leader in ammonia technology, renowned for its decades-long innovation in the ammonia industry. Since 1943, it has licensed, designed, or built more than 260 grassroots ammonia plants across the globe.

The demand for KBR’s technologies in ammonia for food productions, olefins for non-single-use plastics, refining for product diversification and more green solutions to meet tighter environmental standards has been going strong.

KBR’s Stock Performance

Shares of this company have underperformed the Zacks Engineering - R and D Services industry in the past six months. The stock has lost 7% against the industry’s 1.6% growth in the same time frame.

Tri Pointe Homes, Inc. TPH acquired 178 single-family home sites in the Sugarloaf Mountain from Richland Communities in Minneola, FL. This marks the company’s first land acquisition in the greater Orlando area, completed with the land’s bank partner, Kennedy Lewis Investment Management LLC. The expansion aligns with TPH's strategy to enter high-growth markets and address the demand for high-quality housing.

The new community, Pine Ridge at Sugarloaf Mountain, is located on elevated terrain and will feature 15.87 acres of open space. The development is designed to highlight the area’s unique setting. Tri Pointe Homes plans to offer three homesite sizes—45, 55 and 65 feet—tailored for premium entry-level and move-up buyers in Central Florida. Furthermore, Tri Pointe Homes’ design studio, expected to open in fall 2026, will provide curated design options to match individual preferences and lifestyles.

The company views Pine Ridge at Sugarloaf Mountain as an ideal opportunity to bring premium lifestyle offerings to the greater Orlando market. The community is strategically located near major developments and employment centers, designed to meet the growing demand for quality housing in a rapidly expanding region.

The construction at Pine Ridge is set to begin in mid-2025, with model homes scheduled to be built by mid-2026. The grand opening is planned for September 2026.

TPH Expands Into Florida's Growing Market

The company expanded into the greater Orlando market as part of its strategy to grow in high-demand regions across the United States. Tri Pointe Homes has previously expanded into markets such as Utah, Coastal Carolinas and Texas, following its "Best of Big and Small" approach. This strategy allows regional divisions to leverage local knowledge while benefiting from the resources of a nationally recognized homebuilder.

With a strong economy and rapid population growth, the region offers significant opportunities for expansion. Industries like clean technology, aerospace and advanced manufacturing are fueling job creation, making this an ideal market for Tri Pointe Homes. The company is well-positioned to cater to the rising demand for premium homes in the region.

TPH’s Price Performance

Shares of Tri Pointe have gained 46.5% in the past year compared with the Zacks Building Products - Home Builders industry’s 39.5% growth. The company has been benefiting from solid homebuilding industry fundamentals, land-acquisition strategy and cost-control measures. Also, strong demographics and limited availability of homes are likely to support the company in the future.

The Zacks Consensus Estimate for TPH’s 2024 sales and EPS indicates an increase of 19.8% and 36.8%, respectively, from a year ago. The company also delivered a trailing four-quarter earnings surprise of 26.9%, on average.

TPH’s Zacks Rank & Key Picks

Tri Pointe currently has a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Construction sector.

Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

It has a trailing four-quarter earnings surprise of 21.5%, on average. Shares of STRL have gained 202.5% in the past year. The Zacks Consensus Estimate for STRL’s 2024 sales and EPS implies an increase of 9% and 33.3%, respectively, from the prior-year levels.

Louisiana-Pacific Corporation LPX currently sports a Zacks Rank of 1. LPX delivered a trailing four-quarter earnings surprise of 30.7%, on average. The stock has gained 88.7% in the past year.

The Zacks Consensus Estimate for LPX’s 2024 sales and EPS indicates an increase of 12.7% and 72.1%, respectively, from a year ago.

MasTec, Inc. MTZ presently sports a Zacks Rank of 1. MTZ delivered a trailing four-quarter earnings surprise of 40.2%, on average. The stock has risen 151% in the past year.

The Zacks Consensus Estimate for MTZ’s 2024 sales and EPS indicates an increase of 1.9% and 84.3%, respectively, from a year ago.

Zacks Investment Research