Sterling Construction (STRL) AI Stock Analysis

• Market Cap: $3.69B
• Dividend Yield: N/A
• Average Volume (3M): 779.32K
• Price to Earnings (P/E): 14.3
• Beta (1Y): 2.07
• Revenue Growth: 7.28%
• EPS Growth: 85.63%
• Country: US
• Employees: 3,000
• Sector: Industrials
• Sector Strength: 66
• Industry: Construction
• EPS (TTM): 8.27
• Shares Outstanding: 30,603,090
• 10 Day Avg. Volume: 1,066,967
• 30 Day Avg. Volume: 779,322
• PEG Ratio: 0.17
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.75
• Price to Cash Flow (P/CF): 5.30
• P/FCF Ratio: 5.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $185.00
• Price Target Upside: 56.78% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Sterling Construction's overall score reflects strong financial performance and a positive earnings outlook, balanced by weaker technical indicators and fair valuation. The company's success in growing its e-infrastructure segment and maintaining profitability provides a strong foundation, though caution is advised due to current market momentum indicators.

Positive Factors

E-Infrastructure Growth

Acceleration in E-Infrastructure growth driven by data centers and industrial demand is expected to provide a better setup for the stock.

Financial Performance

Shares of Sterling Infrastructure are trading up 5% after reporting fourth-quarter results with EBITDA above consensus and fiscal 2025 guidance ahead of consensus.

Negative Factors

Market Risk

The main risk to shares would be a slowdown in the data center and AI market in the U.S.

Sterling Construction Business Overview & Revenue Model

Company Description

Sterling Construction Company, Inc. (STRL) is a leading infrastructure services provider specializing in the construction and reconstruction of transportation and water infrastructure projects. The company operates primarily in the United States, focusing on building highways, roads, bridges, airfields, and water containment and treatment systems. Sterling Construction offers a broad range of services to both public and private sector clients, leveraging its expertise to deliver complex and large-scale infrastructure projects.

How the Company Makes Money

Sterling Construction generates revenue through its construction contracts, primarily within the transportation and water infrastructure sectors. The company's key revenue streams include project fees earned from constructing highways, bridges, roads, and related infrastructure. Additionally, it engages in site development and civil construction for both public entities and private clients. Sterling Construction often enters into long-term contracts with government agencies, municipalities, and commercial developers, which provide a stable income stream. The company also seeks to maximize profitability through efficient project management and cost control, while strategically expanding its operations to capitalize on growing infrastructure demands across the U.S.

Sterling Construction Financial Statement Overview

Summary

Sterling Construction shows strong financial health with robust revenue and profit growth, effective cost management, and a stable balance sheet. The income statement, balance sheet, and cash flow statement reflect solid financial performance, although there is room for improvement in aligning cash flow with income growth.

Income Statement

Sterling Construction has demonstrated strong revenue growth with a significant increase from $1.97 billion to $2.12 billion, marking a growth rate of approximately 7.3%. The company maintains robust profitability, with a gross profit margin of 20.1% and a remarkable net profit margin increase from 7.03% to 12.17%. The EBIT and EBITDA margins are both strong at approximately 12.5%, indicating effective cost management and operational efficiency. Overall, the income statement reflects impressive growth and profitability.

Balance Sheet

The balance sheet shows a healthy financial position with a solid equity ratio of 40.1%, indicating a strong equity base relative to total assets. The debt-to-equity ratio is 0.46, suggesting moderate leverage, which is manageable given the company's profitability. Additionally, return on equity has improved significantly to 31.9%, reflecting efficient use of shareholder funds. The balance sheet highlights financial stability and effective capital structure management.

Cash Flow

Operating cash flow is robust at $497 million, with free cash flow showing a positive growth trend. The free cash flow to net income ratio is favorable, indicating efficient cash conversion. However, the operating cash flow to net income ratio of 1.93 suggests that cash generation is strong, but there is room for improvement in aligning cash flows with net income growth. Overall, the cash flow statement indicates strong cash generation and effective capital expenditure control.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.12B	1.97B	1.77B	1.58B	1.43B
	Gross Profit
426.12M	337.64M	274.57M	214.76M	191.37M
	EBIT
264.62M	205.79M	159.87M	107.29M	94.89M
	EBITDA
451.94M	277.34M	211.43M	144.76M	126.43M
	Net Income Common Stockholders
257.46M	138.66M	106.46M	62.65M	42.31M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
664.20M	471.56M	181.54M	81.84M	66.19M
	Total Assets
2.02B	1.78B	1.44B	1.23B	952.69M
	Total Debt
369.27M	398.88M	491.16M	481.49M	385.23M
	Net Debt
-294.92M	-72.68M	309.62M	399.65M	319.04M
	Total Liabilities
1.19B	1.15B	963.82M	870.77M	683.97M
	Stockholders Equity
808.08M	618.91M	474.60M	358.77M	267.27M
Cash Flow		Free Cash Flow
416.15M	414.20M	158.21M	104.94M	86.42M
	Operating Cash Flow
497.10M	478.58M	219.12M	151.59M	119.28M
	Investing Cash Flow
-185.85M	-87.75M	-89.75M	-223.45M	-30.49M
	Financing Cash Flow
-118.62M	-104.53M	-32.79M	87.91M	-68.34M

Sterling Construction Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 118.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STRL, the sentiment is Negative. The current price of 118 is below the 20-day moving average (MA) of 127.72, below the 50-day MA of 150.94, and below the 200-day MA of 142.61, indicating a bearish trend. The MACD of -8.73 indicates Negative momentum. The RSI at 38.18 is Neutral, neither overbought nor oversold. The STOCH value of 66.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STRL.

Sterling Construction Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EME	77 Outperform	$17.85B	18.25	37.25%	0.27%	15.76%	61.64%
STRL	72 Outperform	$3.69B	14.26	36.08%	―	7.28%	85.63%
FLR	72 Outperform	$6.17B	2.96	72.85%	―	5.43%	2094.12%
PWR	72 Outperform	$35.70B	39.95	13.32%	0.15%	13.36%	20.00%
ROAD	70 Outperform	$3.82B	65.09	8.41%	―	22.91%	-1.39%
Sector *	62 Neutral	$8.11B	13.34	1.17%	3.02%	4.16%	-15.14%
DY	61 Neutral	$4.16B	17.81	20.35%	―	12.61%	7.43%

Sterling Construction Corporate Events

Sterling Construction Reports Record 2024 Financial Results

Sterling Infrastructure, Inc. reported record financial results for the fourth quarter and full year 2024, with significant increases in revenue, net income, and EBITDA. The company achieved a 3% revenue growth in the fourth quarter and a 7% increase for the full year, alongside a notable rise in gross margins and operating cash flow. The deconsolidation of the RHB joint venture impacted year-end backlog figures, but the company maintained strong performance in its E-Infrastructure Solutions segment, with a 50% growth in operating income. Looking forward, Sterling provided optimistic guidance for 2025, expecting continued revenue and profitability growth, driven by strategic shifts toward higher-margin projects and regions.