Sterling Infrastructure
A Texas contractor that clears and grades the land data centres and chip plants are built on, and wires some of them.
The scores
Growth3/4 ↑
127% in Q3 and 70% organic, but CEC and Stone Ridge were bought and the growth narrows to one kind of building.
Business quality3/4 →
Execution wins repeat phases and the margin has risen for five years, but listed rivals do the same work and most is still bid.
Financial position4/4 →
Net cash of about $122M, a $1.5B revolver to 2031 and cash flow funding the plan, though receivables have doubled.
Execution record4/4 ↑
Ten years moving out of low-bid highways, eight straight quarters of beats and the 2026 guide raised by half.
Per share capture3/4 →
Share count flat and buybacks above stock pay, but acquisitions part-paid in shares and earn-outs owed.
Potential2/4 →
A large, fast-growing market, but next year's growth rests on phases and Texas campuses nobody has signed.
Risk profile3/4 ↓
One serious concentration, nine-tenths of the growth segment in one kind of building, disclosed and spread across customers.
Valuation3/4 ↑
About 16 times this year's guided earnings pays for the raised plan; 13 times next year's needs unsigned work.
Evidence quality3/4 →
Results, backlog and concentration are filed and the market measured by Census; the next phases and customer loyalty are management's word.
The Verdict
We rate Sterling Neutral. It is a solid business: its crews prepare the sites for data centres and chip plants, revenue more than doubled last quarter, most of it without acquisitions, and it holds more cash than debt. The price is fair: about 16 times this year's guided earnings pays for the plan management has raised twice. What it hinges on is next year. Signed work fell in the latest quarter and covers only about half of what analysts expect Sterling to bill in 2027, so the price already counts on contracts nobody has signed yet.
The long caseOwners keep turning powered land into data centres faster than site crews can be found, and keep handing Sterling the next phase where its crews delivered the last one.
The evidence under this - 5 claims
Its own six prior years' median earnings multiple is 15.9 against a trailing 19.1, so it is not cheap against its history (S10).
Signed backlog is still 61% above a year earlier, and the nine-month book-to-burn was 1.3x (S02, S03).
Site phases are signed one at a time, so a contractor in a campus build carries less signed work than it will do (S06).
The company
Before a data centre or a chip plant can be built, hundreds of acres have to be cleared, rock blasted and hauled, and the ground levelled, drained and compacted. Sterling's own crews and machines do that work, from the Southeast to the Rockies and now Texas.
The buyers are the companies building those campuses and their general contractors. Their alternative is another site contractor, often a private regional firm. Sterling also builds highways for states and pours foundations for homebuilders, but those are now a sixth of its sales.
The evidence under this - 4 claims
The 10-K says most of its work is still won by competitive bid, and no customer names its site contractor (S01).
The 10-K says most work is still won by bid, and Micron names no site contractor in its filings (S01).
How it makes money
Sterling is paid per job, usually a fixed price for each phase of a site, so it keeps the profit if it works efficiently and absorbs the overrun if it does not. In the third quarter of 2026 about 83% of its sales came from site and electrical work for data centres, plants and warehouses.
The electrical part came from buying CEC in 2025. Highways and house foundations bring in the rest.
The evidence under this - 4 claims
Where the money comes from, stream by stream
| Stream | Share of sales (Q3 2026) | How it earns it |
|---|---|---|
| E-Infrastructure Solutions | 83.3% | Site preparation and electrical work for data centres, chip plants, factories and warehouses, mostly lump-sum contracts per phase. |
| Heavy highway | 7.4% | Roads and bridges for state transport agencies. |
| Aviation and other transport services | 3.2% | Airports, ports, rail and drainage work. |
| Residential | 4.8% | Concrete foundations and plumbing for homebuilders in Texas and Arizona. |
| Commercial concrete | 1.4% | Foundations, parking structures and elevated slabs for developers. |
Who runs it
Joseph Cutillo has run Sterling since 2017 and moved it from low-bid highway work to site work for data centres. His bonus pays mostly on a profit measure and his long-term shares on earnings per share and on how the stock does against peers.
Insiders own 1.6% of the company. In the past year they bought no shares and sold some, nearly all under plans set in advance, including 100,000 by the chief executive in the spring.
The evidence under this - 2 claims
Why it wins, and who could beat it
Why customers come back
A big campus is built in phases over years, and the contractor already on the ground knows the soil, the rock and the owner. Sterling says it wins the next phase by finishing the last one early, which it says is how a chip maker brought it to a second plant.
From outside it shows up as profit: its site and electrical segment kept 22.6 cents of every sales dollar as operating profit in the third quarter. But no contract stops an owner switching, and most work is still bid.
The evidence under this - 4 claims
The 10-K says most of its work is still won by competitive bid, and no customer names its site contractor (S01).
The threat
On site work, listed civil contractors such as Granite and many private regional firms bid for the same phases. On electrical work, much larger contractors such as Comfort Systems already bill billions a year to technology customers. On highways the lowest bid usually wins.
The evidence under this - 3 claims
The rivals: GVA, FIX, EME, IESC, and 2 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| GVA | Granite Construction and regional private site contractorsPriced against it: Different product | E-Infrastructure Solutions | On sale | Different product |
| FIX · EME · IESC | Comfort Systems, EMCOR and IES HoldingsPriced against it: Different product | E-Infrastructure Solutions | On sale | Different product |
| Not listed | State highway contractors bidding lowPriced against it: Not listed | Transportation Solutions | On sale | Not listed |
| Not listed | Other foundation and plumbing subcontractorsPriced against it: Not listed | Building Solutions | On sale | Not listed |
How big it could get
How big this could get
US builders put money into private data centres at an annual rate of $84.95B in August 2026, up 73.2% in a year, by the US Census Bureau's count. Factory building outside that fell 19.8%.
About nine-tenths of Sterling's signed site work is for data centres, factories and chip plants. Nobody publishes what share of a campus's cost the site work is, so the market Sterling itself sells into cannot be sized.
The evidence under this - 2 claims
The latest month is preliminary and the series counts the whole building, not the site work (S08).
Who has signed
Customers had signed $4.14B of work at the end of September 2026, down from $4.33B in June. A further $2.00B was awarded but unsigned, mostly highways and electrical jobs. Management says the next phases of current campuses are being designed, but none is signed.
The evidence under this - 3 claims
Signed backlog is still 61% above a year earlier, and the nine-month book-to-burn was 1.3x (S02, S03).
None of the phases in design or the further acres is signed, and the 10-Q says most contracts can be ended on short notice (S03).
Site phases are signed one at a time, so a contractor in a campus build carries less signed work than it will do (S06).
Where the growth is coming from, business by business
Where the growth is coming from
| Business | Share of revenue | Growth: last quarter | Last half-year | Last year |
|---|---|---|---|---|
| E-Infrastructure Solutions | 77% | +191.6% | +184.2% | - |
| Transportation Solutions | 13% | -20.4% | -8.8% | - |
| Building Solutions | 9% | -0.7% | +1.1% | - |
| Whole company | 100% | +90.1% | +90.7% | - |
The filed split through 2026-06-30. These rates are not carried forward: the reading below says why.
How we read it: The blend is the business: E-Infrastructure is 83% of revenue, and the score believes the segment's organic rate, not the acquired part, and doubts it carries forward unsigned.
The results
The numbers
Sales grew 93% over the twelve months to Sep 2026, faster than the 18% in the year to Dec 2025.
Operating margin is 18%, up from 10% in the year to Dec 2023.
Running costs take 6¢ of each sales dollar, down from 7¢ in the year to Dec 2021.
Shareholders' money earned 43% a year, up from 20% in the year to Dec 2021.
It turned 11% of sales into free cash, $471M over the last twelve months.
It holds $217M of cash against $95.3M of debt, $122M more cash than it owes.
The share count rose 6.8% in 4.8 years.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-31. Fiscal years end in December.
| Dec 2021 | Dec 2022 | Dec 2023 | Dec 2024 | Dec 2025 | 12 mo to Sep 2026 | |
|---|---|---|---|---|---|---|
| Size and growth | ||||||
| Sales | $1.41B | $1.77B | $1.97B | $2.12B | $2.49B | $4.31B |
| Sales growth | +15% | +25% | +11% | +7.3% | +18% | +93% |
| Profit | ||||||
| Gross margin | 14% | 16% | 17% | 20% | 23% | 24% |
| Operating margin | 7.6% | 9.0% | 10% | 13% | 16% | 18% |
| Net margin | 4.4% | 6.0% | 7.0% | 12% | 12% | 13% |
| What growth costs, per sales dollar | ||||||
| General and admin | 4.9% | 4.9% | 5.0% | 5.6% | 6.2% | 4.9% |
| Pay in shares | 0.8% | 0.7% | 0.7% | 0.9% | 1.0% | - |
| Capital spending | 3.3% | 3.4% | 3.3% | 3.8% | 3.1% | 3.3% |
| Cash | ||||||
| Cash from operations | $159M | $219M | $479M | $497M | $440M | $613M |
| Free cash flow | $112M | $158M | $414M | $416M | $363M | $471M |
| Balance sheet | ||||||
| Cash and short-term investments | $60.9M | $182M | $472M | $664M | $391M | $217M |
| Debt | $452M | $431M | $342M | $316M | $291M | $95.3M |
| Net cash | −$391M | −$250M | $130M | $348M | $99.7M | $122M |
| Returns and shares | ||||||
| Shares (diluted) | 29.1M | 30.6M | 31.2M | 31.1M | 30.9M | 31.1M |
What growth costs
Growth has paid off. From 2021 to 2025 sales grew about three-quarters and the share of each sales dollar kept as operating profit more than doubled, to 16.3%. Machines cost about 3 cents of each sales dollar. The new electrical work keeps less of each dollar than site work, so its growth pulls the average down.
The evidence under this - 3 claims
The last report (28 Oct)
Quarter ended September 2026, filed figures.
The third quarter of 2026 was a record. Revenue rose 127% to $1.56B, and adjusted earnings per share rose to $7.58 from $3.48. Site work grew 133% and the electrical business brought in $425.6M. Management raised its 2026 guide again.
Two things went the other way. Signed work fell to $4.14B as Sterling did more work than it signed, and the money customers owed it more than doubled since December, which management calls timing.
What it did to the thesisIt proved the growth and the profit are real and largely organic. It left open the question the price now turns on: whether next year's work gets signed in time, since the signed total fell for the first time this year.
The quarter in detail
Sales growth from the previous quarter, filed figures.
Earnings per share $7.58 against $6.20 expected; $6.92 as filed, the gap being what the company adds back.
The evidence under this - 5 claims
Signed backlog is still 61% above a year earlier, and the nine-month book-to-burn was 1.3x (S02, S03).
The guide's midpoint implies fourth-quarter revenue near $1.12B, 28% below the third quarter, which management puts down to weather and holidays (S02, S06).
What management did with the money
Management bought two contractors, CEC for $561.6M and Stone Ridge for $178.1M, mostly with cash. It bought back $107.3M of shares this year, more than it issued in stock pay, and repaid its term loan.
Insiders in 2026Q3: 0 purchases and 3 sales, from their Form 4 filings.
The evidence under this - 3 claims
The price, and where we disagree
In short. Fair. The price pays for this year's twice-raised plan, and leaves next year's unsigned work only partly paid for.
The shares fell about two-thirds from their high over the summer and autumn while the business kept beating its own guide: buyers began paying far less for each dollar of sales on fear the data-centre boom is peaking.
Now the test is near. Management expects large Texas data-centre awards in the fourth quarter or early 2027, and the year-end results around 24 February 2027 will show whether signed work recovered and what 2027 is guided to.
The evidence under this - 4 claims
Signed backlog is still 61% above a year earlier, and the nine-month book-to-burn was 1.3x (S02, S03).
The awards are not signed, and the permit dispute is unresolved as of the call (S06).
Management says the guide assumes a harder winter than 2025's and that nothing in Q3 is unrepeatable (S06).
How we read the multiple
1. Management guides about $21.83 of adjusted earnings per share for 2026. 2. At the 30 October price that is about 16 times this year's earnings. 3. Analysts expect about $27 next year, which would make it about 13 times. 4. That needs 2027 sales near $5.46B, and signed work covers only about half of them.
So the price is fair for the year management has guided, and leans on next year arriving.
Against its own history. Buyers pay a little more for each dollar of profit than its own normal, after a record year, so the fall removed the boom premium but not more.
The evidence under this - 4 claims
Its own six prior years' median earnings multiple is 15.9 against a trailing 19.1, so it is not cheap against its history (S10).
Management says the guide assumes a harder winter than 2025's and that nothing in Q3 is unrepeatable (S06).
Site phases are signed one at a time, so a contractor in a campus build carries less signed work than it will do (S06).
The guide's midpoint implies fourth-quarter revenue near $1.12B, 28% below the third quarter, which management puts down to weather and holidays (S02, S06).
Priced against its rivals
None of the listed rivals above sells the same thing to the same buyers as a large part of what it does. A price comparison needs at least two, so the price is judged against its own history instead.
Also checked and set aside: Everus Construction Group (a substitute, not the same product).
Where we disagree with the market
Analysts all rate it a buy, while the market pays far less for its sales than in June, fearing the data-centre boom is peaking.
A strong operator at a fair price, where next year's growth depends on work nobody has signed yet.
Analysts read the raised guides; the market reads a cycle near its peak. We think the business is executing well, but the signed work says 2027 is not yet contracted, and neither side has settled that.
Against us: Sterling has beaten analysts' earnings forecasts eight quarters running, its combined awarded work still rose, and campuses are signed one phase at a time, so a dip in signed work may mean little.
What analysts say, and the evidence
The evidence under this - 5 claims
Site phases are signed one at a time, so a contractor in a campus build carries less signed work than it will do (S06).
Management called the third quarter's bookings soft in advance, in August, so a lag was expected (S06).
Its own six prior years' median earnings multiple is 15.9 against a trailing 19.1, so it is not cheap against its history (S10).
What could go wrong, and how we would know
The risks
- One kind of building About nine-tenths of the growth segment's signed work is data centres, factories and chip plants; a pause in that building would show quickly.
- Signings lag the work Signed work fell in the third quarter as Sterling did more work than customers signed; a second fall would mean less to do next year.
- Cash tied up Customers owed $1.23B at September against $501M in December; slower payment would turn record profits into weak cash.
- Fixed-price phases About 62% of revenue is fixed-price work, so a phase that runs over budget comes out of Sterling's profit.
- Margin at a record The electrical work keeps less of each dollar, and more competition for site work could push the record margin back down.
- Permits and politics A Texas water-permit dispute has left some customers' permits in doubt, management says.
The evidence under this - 6 claims
Signed backlog is still 61% above a year earlier, and the nine-month book-to-burn was 1.3x (S02, S03).
CEC's margin is not filed apart, so the 160 basis points and the core improvement cannot be checked (S03).
The awards are not signed, and the permit dispute is unresolved as of the call (S06).
What we still do not know
- Who the data-centre customers are, and how much of the signed work each holds.
- How much of the third quarter's money owed was collected in October.
- How many of the next phases management describes will be signed, and when.
The evidence under this - 3 claims
The rise is $725M in nine months on revenue growing 105%, and no October figure is filed (S03).
None of the phases in design or the further acres is signed, and the 10-Q says most contracts can be ended on short notice (S03).
What would change our view
- Neutral→AttractiveThe price falls to a cheap multiple
It needs:
- ○The shares fall to 12 times this year's guided earnings, from about 16 today.checked daily
- Neutral→AttractiveThe signings land
It needs all of:
- ○Signed work is back above $4.5B at the end of December 2026.checked at the next results, due by 24 Feb
- ○The first 2027 sales guide is at least $5.4B, against 2026's guided $4.68B.checked at the next results, due by 24 Feb
- Neutral→UnattractiveSignings keep lagging
It needs:
- ○Signed work falls below $4.0B at any quarter end in the next year.checked at the next results, due by 24 Feb
We would also be wrong if
- The site and electrical segment's margin falls below 20% in any 2027 quarter.
- A large customer cancels or pauses a campus, or customers still owe more than $1.1B at year end.
What is coming
- 11 December 2026 Federal highway law extension expires: Whether Congress passes a five-year law or another stopgap for Transportation's public funding.
Every dated event ahead
- 11 December 2026 Federal highway law extension expires: Whether Congress passes a five-year law or another stopgap for Transportation's public funding.
- 24 February 2027 Q4 2026 results and the 2027 guide: Whether signed backlog recovers on the Texas and next-phase awards, the 2027 guide against the $5.46B forecast, and October's collections.
- May 2027 Q1 2027 results: A second quarter of signings after the dip, and whether CEC's margin plan is on track.
Since we wrote this
- 1 NovThesis writtenNeutral, medium convictionWritten two days after Q3 results showed record earnings and the first fall in signed backlog this year, with the shares two-thirds below their high.
Sources 15
Sources - 15
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-02-26the business, segments, strategy, competition, customer concentration by segment, headcount, risk factors and the 2021-2025 statementsbacksC01C08C13C17C36C39
- S02primarycompany release2026-10-28Q3 revenue, organic growth, segment results, CEC revenue, backlog, unsigned awards, book-to-burn, cash flow, balance sheet and the raised 2026 guidebacksC01C02C03C04C05C07C10C21C22C26C30C35C38C39C40
- S03primarycompany filing2026-10-29remaining performance obligations by segment, the MSA estimate, revenue by end market and contract type, unapproved change orders, the CEC and Stone Ridge purchase accounting, the IIJA statusbacksC02C05C10C12C14C21C22C37
- S04primarycompany release2026-08-03June signed backlog, unsigned awards, the mission-critical share of E-Infrastructure backlog and the August guidebacksC05C07
- S05primarycompany filing2026-08-04June remaining performance obligations by segmentbacksC05
- S06primarytranscript2026-10-29Sterling Q3 2026 earnings call transcript (FMP), held 29 October 2026management on backlog, unsigned awards and phases in design, receivables, Q4 margins, CEC margin plan, capacity, Texas permitting, the growth framework and the revolver
On the backlog, I wish somehow we could get out of backlog altogether because it is really a meaningless number for us.
backsC06C11C16C22C24C30C31C34C35C39 - S07primarycompany filing2026-03-25the leaders, ownership by insiders and large holders, and the bonus and long-term award designbacksC28C29
- S08primarygovernment data2026-10-01U.S. Census Bureau, Value of Private Construction Put in Place - Seasonally Adjusted Annual Rate, August 2026 U.S. Census Bureauthe data center line of private construction and the nonresidential and manufacturing lines beside it
Value of Private Construction Put in Place - Seasonally Adjusted Annual Rate ... Nonresidential | Aug 2026p 773010 | Aug 2025 780447 | -1.0 ... Lodging | 23328 | 25954 | -10.1 ... Manufacturing | 168209 | 209798 | -19.8 ... Data center | 84950 | 79007 | 72695 | 65688 | 61859 | 49052 | 7.5 | 73.2
backsC09 - S09primarycompany release2026-02-25full-year 2025 results, December backlog, the mission-critical share at year end and the first 2026 guidebacksC04C07C38C40
- S10secondaryvendor data2026-10-31Research pack (FMP market tier and FINRA short interest), fetched 31 October 2026content/STRL/research-pack.jsonthe 30 October close, market value, the 52-week range, the price move split, analyst estimates and ratings, earnings surprises, short interest and the valuation historybacksC25C26C27C38
- S11primarycompany filing2026-10-21every open-market sale in the year, its plan flag and pricebacksC28
- S12primarycompany filing2026-02-25a rival's list of the listed contractors it competes with, naming Sterling
we face competition from large, publicly traded U.S. construction services companies, including Comfort Systems USA, Inc., EMCOR Group, Inc., IES Holdings, Inc., MasTec, Inc., MYR Group Inc., Primoris Services Corporation, Quanta Services, Inc. and Sterling Infrastructure, Inc.
backsC18 - S13primarycompany filing2026-07-23Comfort Systems' technology revenue and its share of the total
Revenue by Type of Customer | 2026 | 2025 | Technology | $ 1,917,354 | 58.7 % | $ 934,199 | 43.0 %
backsC19 - S14primarycompany filing2026-02-13a listed civil contractor that also sells site preparation to private industrial owners
Within the private sector, we perform various services such as site preparation, mining services and infrastructure services for commercial and industrial sites
backsC20 - S15primarycompany filing2026-07-08the revolving credit facility expanded and extendedbacksC31