Sterling Infrastructure
Project-based, backlog-driven construction services across three segments (E-Infrastructure Solutions, Transportation Solutions, Building Solutions). Asset-light relative to heavy-civil peers; grows organically plus via M&A (CEC Facilities Group acquired Sep 1 2025). Revenue recognized over time on cost-plus, unit-price, and fixed-price contracts; margin mix shifting toward negotiated high-value data-center work.
Earnings, margins, COGS & capex
Three-year revenue into a step-change: $1.97B (FY2023) -> $2.12B (FY2024) -> $2.49B (FY2025), with margins expanding every year (gross ~17% -> >20% -> 22.9%; operating ~10% -> ~13% -> 16.3%) as the mix tilted to E-Infrastructure. The Sep-2025 CEC Facilities Group deal (mission-critical electrical/mechanical) plus organic data-center demand drove Q1 2026 revenue to $825.7M (+92%) and lifted raised FY2026 guidance to $3.70B-$3.80B revenue and $18.40-$19.05 adjusted EPS. Balance sheet is net-cash, and FCF conversion is high given low capex intensity.
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~77¢ is cost of goods and ~7¢ operating expense, leaving ~16¢ of operating profit (~290¢ net).
Revenue trend
Margins
expanding (~17% FY23 -> >20% FY24 -> 22.9% FY25)
expanding
up; adj EBITDA +107% YoY Q1
up
high conversion, low capex
COGS structure
Primarily subcontractor and labor costs, construction materials (aggregates, cement, concrete, steel, electrical gear/switchgear, wire), equipment operating costs, and project overhead. COGS ~77% of revenue FY2025 (improving with mix shift to negotiated mission-critical work). Input-cost and skilled-labor availability are the swing factors on gross margin.
Capex
Light for the sector: 2026 guide $100M-$110M (~3% of revenue, up from $77.3M FY2025), Q1 2026 $19.6M. Growth is funded more by working capital and M&A than by heavy fixed-asset investment, supporting high FCF conversion.
Latest earnings
Beat; revenue $825.7M (+92%), net income $96.0M / $3.09 diluted (net income +143%, EPS +141%), adjusted net income $111.3M / $3.59 adjusted EPS (+120%), adjusted EBITDA $166.6M (+107%). Management raised FY2026 guidance.
FY2026 (raised): revenue $3.70B-$3.80B (~51% growth), GAAP net income $513M-$533M / diluted EPS $16.50-$17.15, adjusted net income $572M-$592M / adjusted EPS $18.40-$19.05, adjusted EBITDA $843M-$873M; capex $100M-$110M.
- Q1 revenue
- $825.7M (+92%; organic >55%)
- Q1 adjusted EPS
- $3.59 (+120%)
- Q1 adjusted EBITDA
- $166.6M (+107%)
- E-Infrastructure Q1 revenue
- $597.7M (+174%; 22.4% op margin)
- CEC Q1 revenue contribution
- $156.1M
- Net cash (Mar 2026)
- $224M ($511.9M cash / $287.5M debt)
- Q1 operating cash flow
- $165.6M
Growth drivers
- Data-center / mission-critical construction supercycle (hyperscaler capex) driving E-Infrastructure site development and electrical demand
- CEC Facilities Group acquisition (closed Sep 1 2025 — $562M: $443M cash + $79M stock + up to $80M earn-out) adding mission-critical electrical/mechanical services, cross-sold with Sterling site development on integrated data-center campuses
- Backlog surge — total signed backlog $3.80B (+78% YoY), combined backlog incl. unsigned awards $5.15B (+131%); mission-critical work dominates the E-Infrastructure pipeline
- Margin-mix shift from low-bid transportation/residential toward negotiated high-value E-Infrastructure
- Federal/state transportation funding (IIJA) supporting the Transportation segment; onshoring / advanced-manufacturing and semiconductor buildout (awarded semiconductor-fab campus work)
- Eventual housing recovery as a call option on the currently soft Building Solutions residential business
Reported financials — SEC EDGAR
Audited GAAP figures pulled from SEC filings · latest filing 2026-02-26. The audited primary-source spine — not financial advice.
Revenue — annual (GAAP)
Margins & balance sheet — FY’25
Bull & bear
Sterling is a near-pure play on the AI data-center construction supercycle with the rare combination of hypergrowth (~51% guided), expanding margins, a net-cash balance sheet, and high FCF conversion -- and the CEC deal turned it into an integrated site+electrical provider hyperscalers want as a single vendor.
- E-Infrastructure grew revenue +174% in Q1 2026 to $597.7M with mission-critical work (data centers, semis, advanced mfg) dominating the segment backlog -- a multi-year visible pipeline, not a one-quarter spike
- Guidance raised to $3.70B-$3.80B revenue and $18.40-$19.05 adjusted EPS (midpoint ~72% adj EPS growth); adjusted net income already +53% in FY2025 before the full CEC year
- Margins expanding structurally (gross ~17% -> 22.9% over three years) as the mix moves to negotiated high-value work -- operating leverage, not just volume
- Net cash +$224M plus undrawn revolver funds further accretive M&A in fragmented mission-critical trades; CEC contributed $156.1M in its first full quarter
- Low ~3% capex intensity means growth throws off cash; FCF ~$363M FY2025 supports buybacks and deals
- Cross-sell proof point: integrated site + electrical being delivered on active data-center campuses post-CEC
The thesis rides on hyperscaler data-center capex staying vertical, and the stock is priced for it (~38x forward adjusted EPS, ~5.7x forward EV/revenue for a construction contractor). Any AI-capex digestion, customer-concentration event, or labor-cost squeeze de-rates a richly valued cyclical -- the early-July 2026 selloff showed how fast.
- Extreme valuation for an E&C name -- ~38x FY2026 adjusted EPS and multiples that leave little room for a guide-down; 52-week range $225-$1,006 shows the volatility
- Growth is heavily levered to a small set of hyperscalers' AI capex plans; a pause/rationalization in data-center buildout hits E-Infrastructure directly
- Building Solutions residential is soft (housing-rate drag) -- the non-data-center portfolio lags the growth story
- CEC-driven +92% is partly inorganic ($156.1M contribution); comparability against a step-changed base gets harder and integration/goodwill risk is real
- Skilled-electrician and switchgear-lead-time constraints could cap the very growth being extrapolated, and labor inflation pressures newly-won margins
- Early-July 2026 double-digit drawdown in a sector-wide AI/data-center-sentiment selloff (peers PWR/FIX/MTZ/EME/DY all down), coinciding with a shift into larger-cap Russell indices -- flow/sentiment fragility on a crowded, high-multiple name
- Construction is milestone-lumpy with working-capital and change-order risk on large fixed-scope projects
What it is worth
Triangulation: forward P/E on FY2026 adjusted EPS guide (~$18.72 midpoint) and EV/revenue vs E&C peers, cross-checked against EV/EBITDA (adj EBITDA guide $843M-$873M). At $706.62 and +$224M net cash, EV ~$21.3B.
AI/data-center capex digests, residential stays weak, and labor costs bite; growth decelerates and a high-multiple cyclical de-rates toward ~20-25x forward adjusted EPS -- a large drawdown given how much is priced in (52-week low $225 shows the downside range).
FY2026 lands within guide ($3.70B-$3.80B revenue, ~$18.40-$19.05 adj EPS); multiple normalizes modestly toward ~30-35x as growth is partly inorganic -- fair value broadly around the current-to-slightly-lower range with EPS carrying the stock.
Data-center supercycle persists, CEC cross-sell compounds, margins keep expanding and further M&A is accretive -- adjusted EPS grows past $19 and a durable ~35-40x holds, supporting a return toward the four-figure prior high.
Trades ~38x FY2026 adjusted EPS and ~5.7x FY2026 guided revenue (~25x guided adj EBITDA) -- a large premium to legacy E&C multiples, justified by ~51% growth, expanding margins, net cash, and data-center exposure, but leaving little room for a growth disappointment. The multiple is closer to Comfort Systems/Quanta growth-comp territory than to Granite/Tutor Perini.
SWOT
Strengths
- Best-in-class margin trajectory for an E&C name (operating margin 16.3%, gross ~23% and rising)
- Net-cash balance sheet (+$224M) and strong FCF conversion (~$363M FY2025) fund M&A and buybacks without leverage
- Leading position in the highest-demand construction end market (data-center / mission-critical site + electrical)
- CEC integration tracking to plan; genuine cross-sell of site + electrical on the same campuses
- Low capex intensity (~3%) relative to construction peers
Weaknesses
- Revenue concentration in E-Infrastructure and a handful of large hyperscaler-linked projects/customers
- Building Solutions residential business soft amid the housing slowdown (segment op margin 10.2% FY2025)
- Project-based, milestone-lumpy revenue and working-capital swings inherent to construction
- Skilled-labor and licensed-electrician availability is a hard capacity constraint on scaling mission-critical work
- Acquisitive growth adds integration and goodwill risk; a chunk of Q1's +92% is inorganic
Opportunities
- Multi-year hyperscaler/AI data-center capex cycle with mission-critical work dominating the E-Infra backlog
- Further tuck-in M&A in electrical/mechanical mission-critical trades (fragmented market)
- Advanced-manufacturing / semiconductor and onshoring buildout (awarded fab-campus work, future phases >$1.3B)
- Transportation funded by IIJA; E-Infrastructure adjacency into power/grid
- Housing-recovery optionality in Building Solutions
Threats
- A pause or deceleration in hyperscaler AI/data-center capex would hit the growth engine directly
- Valuation priced for continued hypergrowth (~38x forward adjusted EPS); any guide-down is amplified
- Customer concentration among a few hyperscalers with buyer power over pricing/terms
- Skilled-labor cost inflation and shortages compressing margins
- Input-cost inflation (electrical gear/switchgear lead times, steel, cement); rate-sensitive residential and transportation cyclicality
Moats, dependencies & bottlenecks
Moats
Integrated site development + mission-critical electrical/mechanical (post-CEC) as a single-vendor solution for data-center campuses Real cross-sell advantage and switching friction on active campuses, but replicable by larger electrical peers (Quanta, EMCOR, Comfort Systems).
reputation, and safety/execution record on mission-critical projects Hyperscalers gate vendors on execution certainty; hard to win in, but not exclusive.
Scarce electrician capacity is a genuine bottleneck; whoever holds the crews holds the work -- but it is also a cost.
Backlog visibility and geographic footprint in high-growth data-center corridors Backlog is a lead indicator, not a durable barrier; contracts are re-bid.
Dependencies
Microsoft, Alphabet, Meta) Demand / customer The core growth driver; a capex slowdown flows straight to E-Infrastructure revenue and backlog.
CEC Facilities Group integration + acquired electrical/mechanical talent Operational / M&A Large share of Q1 growth ($156.1M); execution and retention risk on the $562M deal.
Hard capacity ceiling and cost-inflation lever on margins.
steel, aggregates) supply Switchgear/transformer lead times can gate mission-critical project schedules.
Underpins Transportation segment; appropriations and reauthorization risk.
Drives the Building Solutions residential business, currently soft.
Advantages
- One of the few mid-caps offering combined site development + mission-critical electrical/mechanical to hyperscalers
- Net-cash balance sheet and high FCF conversion in a capital-light-for-sector model
- Demonstrated margin expansion and disciplined mix shift toward negotiated work
- Backlog weighted to mission-critical projects -- high-quality demand
- Proven, accretive M&A playbook (CEC contributing in its first full quarter)
Weaknesses
- End-market and customer concentration in data-center / hyperscaler capex
- Priced for perfection; high sensitivity to any growth disappointment
- Soft residential Building Solutions segment
- Growth partly inorganic, raising integration/goodwill and comparability risk
- Labor-cost inflation threatens newly-won margins
Bottlenecks
- Availability of licensed electricians and skilled construction labor to staff mission-critical work
- Switchgear/transformer and electrical-equipment lead times on data-center schedules
- Working-capital funding of large project ramps (receivables/retainage timing)
- Integration bandwidth for continued tuck-in M&A
- Permitting and power availability at data-center sites (indirect gate on customer demand)
Top signals & trends
Top signals
Management confidence in the data-center pipeline; beat-and-raise pattern continued from 2025.
Demand visibility is real, with organic Q1 growth >55% beyond the acquisition.
Integration and cross-sell traction on active data-center campuses.
Housing-rate drag on the non-data-center portfolio.
Flow/sentiment fragility on a crowded, high-multiple name (peers PWR/FIX/MTZ/EME/DY all fell) rather than a fundamental change.
Little margin for error; amplifies any guide-down.
Trends
High positive · Primary tailwind; hyperscaler capex driving E-Infrastructure site + electrical demand.
Secondary mission-critical demand source beyond data centers (awarded fab-campus work).
Fragmented market supports Sterling's tuck-in M&A strategy.
Raises barriers/pricing but caps capacity and pressures margins.
Negative (current) · Weighs on Building Solutions residential until rates ease.
Supports Transportation Solutions volumes.
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Electrical gear, switchgear, power distribution for data-center electrical scope.
Electrical enclosures, connection and protection products.
Electrical and utility-grade components.
Aggregates/asphalt for site development and transportation.
Aggregates and cement inputs.
Earthmoving/construction equipment for site development.
Construction and road equipment supplier.
Hyperscaler data-center capex -- core E-Infrastructure demand.
Azure data-center buildout.
Google Cloud data-center capex.
AI data-center construction demand.
Data-center developer/operator building capacity for hyperscalers.
Data-center REIT customer for site/electrical work.
Homebuilder customer for Building Solutions (residential concrete/site).
Homebuilder customer for residential building services.
Transportation Solutions customers funded partly by IIJA (not publicly traded).
Largest electrical/infrastructure contractor; direct competitor in mission-critical electrical and data-center power/grid work.
Mechanical/electrical construction and facilities services; major player in data-center mechanical/electrical.
Mechanical + electrical with fast-growing data-center/mission-critical exposure; closest thesis comp.
Diversified infrastructure (communications, power, pipeline, clean energy); overlaps in large-scale site/power work.
Energy/utility and infrastructure construction; overlaps in E-Infrastructure and transportation.
Electrical/infrastructure solutions with data-center and residential exposure; smaller but overlapping.
Safety and specialty services incl. electrical/mechanical; adjacent mission-critical exposure.
Roads/heavy-civil; competes with Transportation Solutions.
Roadway/asphalt construction in the Sunbelt; Transportation overlap.
Telecom/utility infrastructure; adjacent, limited direct overlap.
Large civil/building general contractor; overlaps on heavy civil, different margin profile.