STRL · Sterling Infrastructure
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $235
Note written ·
How this view changed
- · Rating cut from High to Medium. The note's kill line was crossed, 10 November 2026: The shares closed at $289.56 on 10 November 2026, below the $340 kill line in the previous note, with no company filing or guidance change to explain the fall from the $388.87 close on 28 October 2026.
Price against the kill line
24.4% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $235.00, on record since 11 November 2026. The shares are down 51.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $235, which would be a new 52-week closing low under the 5 November 2026 close of $244.34 and show the sector selling still overriding results. A cut of 2026 adjusted EPS guidance below $21.70, or signed backlog below $4.14 billion at the next report, would also break the case.
Research onlyNot in the portfolio.
Last catalyst
Key figures from the filings · Industrials
Quarter to 30 September 2026, filed 29 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,564
- Revenue, change on a year (%)
- +127.0
- Gross margin (%)
- 24.1
- Operating margin (%)
- 19.6
- Free cash flow, four quarters ($M)
- 471
- Net cash, cash less debt ($M)
- 122
- Price to earnings (×)
- 16.1
- Enterprise value to sales (×)
- 2.0
All filed numbers
What Sterling Infrastructure reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 1,564 | +127.0 | 24.1 | 19.6 |
| first filed | 1,168 | +90.1 | 24.8 | 18.8 |
| first filed | 826 | +91.6 | 23.5 | 16.7 |
| first filed | 756 | +51.5 | 21.7 | 15.9 |
| first filed | 689 | +16.0 | 24.7 | 18.2 |
| first filed | 615 | +5.4 | 23.3 | 17.0 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: 554 | 215 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +0.4 |
| Operating cash flow ($M) | 613 |
| Capital spending ($M) | 142 |
| Free cash flow ($M) | 471 |
| Cash and short-term investments ($M) | 217 |
| Debt ($M) non-current long-term debt plus current maturities | 95.3 |
| Net cash, cash less debt ($M) | 122 |
| Deferred revenue ($M) +48.9% on a year | 917 |
| Backlog, orders not yet delivered ($M) +57.2% on a year | 4,049 |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 1,508 |
| Market value ($M) | 8,919 |
| Enterprise value, market value plus net debt ($M) | 8,797 |
| Enterprise value to sales (×) | 2.0 |
| Enterprise value to operating income (×) | 11.2 |
| Price to earnings (×) | 16.1 |
| Price to book value (×) | 5.9 |
| Free-cash-flow yield (%) | 5.3 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 4.2% of shares outstanding sold short, 2.0 days of average trading to cover, +9.3% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $96.3M |
The thesis
Sterling Infrastructure is modestly more likely to beat the S&P 500 over the next three months. The company raised 2026 adjusted earnings per share (EPS) guidance to $21.70–21.96 on 28 October 2026, and the shares trade far below where they were before the results. Nvidia's report on 17 November 2026 shows whether data-center spending plans support the sector, and Sterling's fourth-quarter report, estimated for late February 2027, shows whether signed backlog stops shrinking.
The shares closed at $301.60 on 12 November 2026. That is 70.0% below the 52-week intraday high of $1,005.68 set on 4 June 2026, and the 3-month change is −47.7% (adjusted daily closes). The 52-week closing low is $244.34 on 5 November 2026. The 50-day average is $438.64 and the 200-day average is $549.14, so the shares sit well below both.
The market has priced in a sharp slowdown in data-center awards. Sterling's price-to-earnings ratio was 16.2 on 10 November 2026 against an industry median of 24.3 (AAII), and the Q3 report that produced the guidance raise showed no slowdown in revenue. MarketBeat reported a 14.4% intraday fall on 4 November 2026, from a $361.14 prior close to a low of $300.15, and no company filing in that window explains it.
Analysts remain positive after the report. JPMorgan initiated at Overweight with a $585 target on 10 November 2026 (news reports). Cantor Fitzgerald kept Overweight and cut its target to $565 from $742 on 2 November 2026. DA Davidson cut its target to $680 from $700 on 30 October 2026 (MarketBeat).
Bullish and bearish views on Sterling Infrastructure, Inc.
The bull case on Sterling Infrastructure, Inc. (STRL), in brief: earnings beat and guidance raise. The bear case: signed backlog fell from the previous quarter.
Bull case
- Earnings beat and guidance raise. Third-quarter adjusted EPS was $7.58 against a $5.60 estimate in Benzinga's tally. Revenue guidance rose to $4.63–4.73 billion from $4.00–4.15 billion (company release, 28 October 2026).
- Data-center electrical work drives growth. E-Infrastructure Solutions revenue rose 212% to $1.30 billion at a 22.6% operating margin in the third quarter (company release, 28 October 2026). Part of that growth comes from the CEC electrical business acquired on 1 September 2025.
- Combined backlog reached $6.14 billion. That is up 78% from a year earlier at 30 September 2026, and up from $5.62 billion at 30 June 2026 (company releases).
- The multiple has compressed. AAII showed a price-to-earnings ratio of 16.2 on 10 November 2026, against an industry median of 24.3.
- Management is in front of investors. Sterling presented at the Baird conference on 11 November 2026, at Cantor Convergence on 12 November 2026, and at the J.P. Morgan U.S. Opportunities Forum on 13 November 2026 (company release, 3 November 2026).
- The company is buying back stock. Sterling repurchased $107.3 million of shares in the first nine months of 2026 (company release, 28 October 2026).
Bear case
- Signed backlog fell from the previous quarter. It was $4.14 billion at 30 September 2026 against $4.33 billion at 30 June 2026, while unsigned awards rose to $2.00 billion from $1.28 billion (company releases). Unsigned awards are not yet contracts.
- The market rejected a strong report. The shares set a 52-week closing low of $244.34 on 5 November 2026, days after a guidance raise, and no guidance cut explains the fall.
- The price trend is still broken. The $301.60 close on 12 November 2026 is below the 50-day average of $438.64 and the 200-day average of $549.14 (adjusted daily closes).
- A possible share sale hangs over the stock. Sterling filed a mixed securities registration statement on 12 May 2026 whose size was not disclosed, so a takedown could arrive without notice.
- Analysts are cutting targets. Cantor lowered its target by $177 on 2 November 2026, and DA Davidson lowered its target on 30 October 2026 (MarketBeat).
- Revenue depends on one segment. E-Infrastructure Solutions supplied $1.30 billion of the $1.56 billion third-quarter revenue, while Transportation fell 3.1% and Building Solutions fell 5.4% (company release, 28 October 2026).
Price setup
The shares closed at $244.34 on 5 November 2026 and $252.82 on 6 November 2026. They closed at $290.67 on 9 November 2026, $289.56 on 10 November 2026, $303.85 on 11 November 2026 and $301.60 on 12 November 2026 (adjusted daily closes). The rebound has not reached the 50-day average of $438.64.
Beta, a measure of how far the shares swing against the market, was 1.97 (MarketBeat, 4 November 2026). The shares move about twice as far as the index on both up and down days.
SEC Form 4 filings show a gift of 40,000 shares by Chief Executive Officer Joseph Cutillo on 21 September 2026 and an award of 1,087 shares to General Counsel Katherine Hargis on 5 October 2026. The company filed its 10-Q quarterly report on 29 October 2026.
Catalysts ahead
- 17 November 2026: Nvidia third-quarter fiscal 2027 report, after the market close. Data-center awards trace to hyperscaler budgets; firm 2027 spending plans would ease the worries behind the sector selling.
- ~25 February 2027 (est.): Sterling fourth-quarter and full-year 2026 report. Shows whether signed backlog stabilises above $4.14 billion and whether 2027 guidance confirms the raised 2026 outlook.
Elapsed catalysts
- 13 November 2026: Sterling presents at the J.P. Morgan U.S. Opportunities Forum in Miami (11:40 a.m. to 12:25 p.m. Eastern). Management comments on converting $2.00 billion of unsigned awards and on 2027 demand address the main bear point. (passed)
What would change the view
A daily close below $235, which would be a new 52-week closing low under the 5 November 2026 close of $244.34 and show the sector selling still overriding results. A cut of 2026 adjusted EPS guidance below $21.70, or signed backlog below $4.14 billion at the next report, would also break the case.
The risks this note tracks, each with what would confirm it:
- The sector selling continues despite strong results, pushing the shares to new lows. Confirmed by: data-center peers falling together again on no company-specific news, or a close below the 5 November 2026 closing low of $244.34.
- Signed backlog keeps shrinking while unsigned awards grow, so combined backlog overstates contracted work. Confirmed by: signed backlog below $4.14 billion at the next quarterly report, or the $2.00 billion of unsigned awards shrinking without converting to contracts.
- Equity issuance under the 12 May 2026 registration statement caps a recovery. Confirmed by: a 424B prospectus or 8-K takedown filing.
- Hyperscaler spending digestion slows data-center awards. Confirmed by: cloud platforms guiding 2027 capital spending flat or lower, or Nvidia's 17 November 2026 report showing weaker demand.
- Fourth-quarter delivery falls short of the raised guidance because of project timing or labor shortages. Confirmed by: 2026 adjusted EPS guidance cut below $21.70 or revenue guidance below $4.63 billion at the next report.
What it trades with
Sterling trades with data-center infrastructure contractors and electrical suppliers, including Comfort Systems, EMCOR, Quanta and Vertiv, and with sentiment on hyperscaler capital spending. Nvidia's 17 November 2026 report is the nearest read on that spending. Sterling's high beta of 1.97 means sector moves show up in the shares at close to twice their size.
Adjusted EPS excludes acquisition amortization: the 2026 GAAP guide is $19.16–19.42 against adjusted $21.70–21.96. Revenue is contract-based and lumpy, so single quarters can swing against the trend.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue $1.56 billion, up 127% from a year earlier; adjusted diluted EPS $7.58; 2026 adjusted EPS guidance raised to $21.70–21.96 and revenue guidance to $4.63–4.73 billion. Sterling third-quarter 2026 earnings release (8-K Exhibit 99.1) · as of
- Signed backlog $4.14 billion (from $4.33 billion at 30 June 2026); unsigned awards $2.00 billion; combined backlog $6.14 billion. Sterling third-quarter 2026 earnings release · as of
- Shares fell 14.4% intraday from a $361.14 prior close to a low of $300.15; beta 1.97; six Buy and two Hold ratings. MarketBeat · as of
- Price-to-earnings ratio 16.2 against an industry median of 24.3. AAII · as of
- JPMorgan initiated coverage at Overweight with a $585 price target. News reports · as of
- Cantor Fitzgerald kept Overweight and lowered its target to $565 from $742; DA Davidson cut its target to $680 from $700 on 30 October 2026. MarketBeat · as of
- Sterling to present at the Baird conference (11 November 2026), Cantor Convergence (12 November 2026) and the J.P. Morgan U.S. Opportunities Forum (13 November 2026). Sterling press release via PR Newswire · as of
- Closed at $301.60; 52-week closing low $244.34 on 5 November 2026; 50-day average $438.64; 200-day average $549.14; 3-month change −47.7%. Adjusted daily closes · as of
Sources
- Sterling to Participate in Upcoming Investor Conferences · finviz.com ·
- NVIDIA Sets Conference Call for Third Quarter Financial Results · investor.nvidia.com
- Why Sterling Infrastructure, Inc.'s (STRL) Stock Is Down 5.85% · aaii.com ·
- Sterling Infrastructure (NASDAQ:STRL) Stock Falls 14.4% - Time to Sell? · marketbeat.com ·
- Sterling Infrastructure (NASDAQ:STRL) Stock Rating Reaffirmed as "Overweight" by Cantor Fitzgerald · marketbeat.com ·
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