Sterling Before Q2 Earnings: Should You Buy, Sell or Hold the Stock?

Sterling's Q2 earnings may reflect data center momentum, improved project mix and pressure in Building Solutions.

Shrabana Mukherjee

5 min read

Sterling Infrastructure, Inc. STRL is scheduled to report second-quarter 2026 results on Aug. 3, after market close. The quarter is expected to have benefited from continued strength in its E-Infrastructure business, driven by robust demand for large-scale data center, semiconductor and manufacturing site development projects. Strong hyperscaler spending, geographic expansion and increasing cross-selling between site development and electrical operations are expected to have supported healthy revenue growth.

In the last reported quarter, Sterling reported strong results, with adjusted earnings per share (EPS) and revenues beating the Zacks Consensus Estimate by 56.8% and 41.1%, respectively. Revenues increased 92% from $430.9 million in the year-ago quarter. The recently acquired CEC Facilities Group contributed $156.1 million to revenues during the quarter. Adjusted EPS grew 120.3% from a year ago. Adjusted EBITDA rose 107% year over year to $166.6 million, and adjusted EBITDA margin improved to 20.2% from 18.6%, up roughly 150 basis points.

This Texas-based e-infrastructure solutions, building solutions and transportation solutions provider has an impressive record of surpassing earnings expectations, exceeding the consensus mark in the last four quarters, as shown in the chart below.

Image Source: Zacks Investment Research

How Are Estimates Placed for STRL Stock?

The Zacks Consensus Estimate for second-quarter EPS has increased to $5.20 from $5.09 over the past 30 days. The estimated figure implies 93.3% growth from the year-ago reported figure. The consensus mark for revenues is pegged at $1.07 billion, indicating 74% year-over-year growth.

For 2026, Sterling is expected to register a 59.2% increase in revenues from a year ago. Its EPS is likely to grow 74.7% from a year ago. Below is what to expect from the STRL stock.

Image Source: Zacks Investment Research

What the Zacks Model Unveils for Sterling Stock

Our proven model does not conclusively predict an earnings beat for Sterling for the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here.

Earnings ESP: STRL has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Shape Sterling’s Q2 Results

E-Infrastructure to Lead, While Other Segments Stay Mixed: Second-quarter revenues are likely to have been driven primarily by the E-Infrastructure segment (which accounted for 72% of total first-quarter 2026 revenues), where large mission-critical projects continue to ramp up. Sterling expects legacy E-Infrastructure operations to grow at rates approaching 60% or higher during 2026, while total segment revenues are projected to increase at least 80%, supported by the full-year contribution from CEC and accelerating activity across major projects. Strong backlog, expanding semiconductor opportunities and additional manufacturing awards expected later in 2026 should continue to support healthy project execution.

The recently completed acquisition of Stone Ridge also expands Sterling's site development footprint in the Pacific Northwest and Texas, although management plans to incorporate its partial-year financial contribution into guidance when reporting second-quarter results. The Zacks Consensus Estimate for E-Infrastructure Solutions revenues for the to-be-reported quarter is pegged at $772 million, up from $310 million reported a year ago.

The Transportation Solutions segment (which accounted for 16% of total first-quarter 2026 revenues) is expected to be low from the year-ago level during the quarter. The segment is likely to have been supported by healthy activity in the Rocky Mountain region and a solid backlog. However, management expects growth to moderate compared with the first quarter as projects that started early reduce sequential activity, more resources are allocated to higher-return E-Infrastructure projects and the company continues winding down its lower-margin Texas heavy highway business. Even so, project mix improvements are expected to have supported margin expansion. The consensus mark for Transportation Solutions revenues is pegged at $183 million, indicating a decrease from $197 million a year ago.

The Building Solutions segment (which accounted for 12% of total first-quarter 2026 revenues) is likely to have remained under pressure as elevated mortgage rates and housing affordability challenges continue to weigh on residential construction. Management expects revenues to decline modestly during 2026, although disciplined execution and selective bidding should help maintain adjusted operating margins in the low-double-digit range despite the softer housing backdrop. The consensus mark for Building Solutions revenues is pegged at $91 million, implying a decrease of 15% year over year.

Margin Outlook Supported by Project Mix: Margins are expected to remain resilient in the second quarter, supported by Sterling's focus on larger, higher-value projects and improved operating efficiencies through vertical integration. Management expects E-Infrastructure operating margins to remain in the mid-20% range as execution on complex mission-critical projects, increasing electrical and site development integration and continued productivity improvements offset dilution from recent acquisitions. Transportation margins should also benefit from the ongoing exit of lower-margin Texas highway work. However, profitability in Building Solutions is likely to remain constrained by soft residential market conditions.

The Zacks Consensus Estimate for E-Infrastructure Solutions’ operating income for the to-be-reported quarter is pegged at $173 million, up from $84 million reported a year ago. The consensus mark for Transportation Solutions’ operating income is pegged at $26.5 million, indicating an increase of 1.8% year over year. The consensus mark for Building Solutions’ operating income is pegged at $8.7 million, calling for a decline of 12.3% year over year.

STRL Stock’s Price Performance

Shares of Sterling have surged 61.4% year to date (YTD), significantly outperforming the Zacks Engineering – R&D Services industry, the broader Construction sector and the S&P 500, as shown below.

STRL Price Performance (YTD)

Image Source: Zacks Investment Research

Sterling competes with Quanta Services PWR, MasTec MTZ and EMCOR Group EME across data center, utility and mission-critical infrastructure markets. So far this year, Quanta and MasTec have gained 33% and 32.2%, respectively, while EMCOR has advanced 9.9%. Sterling stands out through its leadership in large-scale site development, growing semiconductor exposure and integrated electrical capabilities, positioning it well to benefit from continued infrastructure and data center investments.

Valuation Trend for STRL Stock

Sterling shares are currently trading at a forward 12-month price-to-earnings (P/E) ratio of 21.84, a discount to its industry, as shown below.

STRL’s P/E Ratio (Forward 12 Months) vs. Industry

Image Source: Zacks Investment Research

At 21.84X forward 12-month earnings, Sterling trades at a discount to many of its infrastructure peers despite its strong exposure to high-growth data center and mission-critical construction markets. In comparison, PWR trades at 36.32X, reflecting its premium positioning in utility infrastructure, while MTZ trades at 23.08X. EME trades at 21.4X, broadly in line with STRL. Sterling's valuation suggests the market has yet to fully price in its accelerating growth opportunities in hyperscale data centers, semiconductor fabrication and integrated electrical services, leaving room for further multiple expansion if the company continues to execute on its strong backlog and growth strategy.

Why Is STRL Stock a Buy for Now?

Sterling appears well-positioned ahead of its second-quarter results, supported by robust demand for data center, semiconductor and manufacturing projects, accelerating growth in its E-Infrastructure business and resilient margins driven by a favorable project mix. Strong backlog, expanding cross-selling opportunities and contributions from recent acquisitions reinforce its long-term growth outlook. With estimates moving higher and the stock trading at a reasonable valuation relative to its growth prospects, investors may consider buying STRL before its earnings release.

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