Sterling Infrastructure, Inc. STRL is in a cycle where visibility matters as much as velocity. The company is converting mission-critical demand into a deeper backlog, while expanding scope through integrated site and electrical delivery. That combination is showing up in results, guidance and a shifting margin profile.
With a Zacks Rank #1 (Strong Buy), Sterling is positioned around multi-year capital spending in data centers, advanced manufacturing, and semiconductors. You can see the complete list of today’s Zacks #1 Rank stocks here.
STRL’s Mission-Critical Backlog Is Driving Visibility
Sterling exited the first quarter of 2026 with signed backlog up 78% year over year to $3.8 billion. Combined backlog climbed 131% to $5.2 billion. Beyond signed awards, management highlighted “future phases” that lift total visibility toward nearly $6.5 billion. More than 90% of the signed E-Infrastructure segment’s backlog is tied to mission-critical work, including data centers, large manufacturing and semiconductors. Management also reiterated that data center demand is expected to continue for the foreseeable future.
This depth aligns Sterling with customers executing multi-year capital plans. It supports steadier revenue conversion and pricing discipline beyond 2026, particularly as large projects move through phased execution into 2027.
Sterling’s Integrated Model is Scaling Faster Than Planned
Sterling’s combined offering of site development and mission-critical electrical services is gaining traction ahead of schedule. In the first quarter of 2026, management said two data center campuses moved to integrated execution six-eight months earlier than planned.
Pulling integration forward can change outcomes. It validates cross-sell traction and supports schedule compression, which can improve execution certainty on time-sensitive projects. That also tends to support better win rates as customers prioritize delivery confidence and fewer handoffs.
Sterling is also investing in tools and processes that reinforce this model. Management cited Artificial Intelligence tools that increased project manager capacity by about 15%, and a modular manufacturing program expected to triple capacity within roughly 18 months. These initiatives are designed to reduce field labor intensity and improve quality and efficiency.
Sterling’s Segment Mix Shows Where Momentum Is Concentrated
Momentum is concentrated in the E-Infrastructure Solutions segment, which represented 72% of first-quarter 2026 revenue. Segment revenues jumped to $597.7 million from $218.3 million a year ago, and adjusted operating income rose to $140.3 million from $50.6 million as mission-critical mix and execution improved profitability.
Transportation Solutions segment showed steady progress in the first quarter of 2026. Revenues increased to $132.9 million from $120.7 million, and operating income rose to $17.1 million from $13.6 million, supported by strength in the Rocky Mountain market and a strategic shift toward higher-margin projects.
However, the Building Solutions segment remained a headwind during the first quarter of 2026. Revenues edged up to $95.1 million, but operating margin fell to 6.5% from 13.4% amid affordability pressure that management expects to persist through 2026. That mix dynamic matters for consolidated momentum, making E-Infrastructure’s growth and margin trajectory the key swing factor. In the broader group, Quanta Services $PWR, Inc. PWR, which flaunts a Zacks Rank of 1 and MasTec, Inc. MTZ, which holds a Zacks Rank #3 (Hold), reinforce how investors are rewarding scaled infrastructure platforms with clearer execution paths.
STRL’s Q1 Beat Shows Operating Leverage in Action
First-quarter 2026 results underscored how operating leverage is emerging in the model. Adjusted earnings were $3.59 per share, up 56.8% from the Zacks Consensus Estimate of $2.29. Revenue was up 41.1% to $825.7 million from the $585 million consensus mark, and increased 92% year over year.
Margins improved with the growth. Gross margin expanded to 23.5%, and adjusted EBITDA margin rose to 20.2%. Adjusted EBITDA increased 107% year over year to $166.6 million, reflecting profit growth that outpaced the top line.
E-Infrastructure execution and the added scale from CEC were central drivers, while Transportation also contributed through a higher-margin mix and favorable timing. The quarter supported management’s raised 2026 outlook, including revenue guidance of $3.70 to $3.80 billion and adjusted earnings per share guidance of $18.40 to $19.05.
Sterling’s CEC Wins Add Scale and Duration
The acquisition of CEC Facilities Group on Sep. 1, 2025, broadened the E-Infrastructure platform and added electrical scale. In the first quarter of 2026, the acquired business contributed $156.1 million of revenue, giving Sterling more capacity to pursue larger, integrated opportunities. Since the acquisition, management said CEC secured several large project awards that contributed to a $1.2 billion increase in CEC’s combined backlog. The wins reflect traction in mission-critical electrical services and expand the volume of secured work feeding future revenue.
Duration is becoming a differentiator. Management pointed to an initial phase award for a major semiconductor fabrication campus expected to run through late 2027 or early 2028. That kind of multi-year award improves line of sight and supports the integrated delivery strategy across phases.
STRL’s Margin Levers Extend Beyond a Single Quarter
Sterling is framing margin expansion as a multi-part, self-help roadmap. For E-Infrastructure, the company is targeting adjusted operating margins in the mid-20% range in 2026, with further improvement expected over time as projects scale in complexity and size.
CEC has its own profitability plan. Management is targeting 300-500 basis points of CEC margin expansion over 12-18 months as lower-margin end markets are exited and joint site plus electrical delivery expands. The goal is to move electrical from a scale driver toward a margin contributor as normalization plays out through 2026 and 2027.
Sterling is also reshaping the Transportation portfolio by winding down Texas low-bid heavy highway work and shifting to higher-margin opportunities, while redeploying assets into E-Infrastructure. Together with modularization and productivity tools, these actions support sustained consolidated margin improvement as the mix tilts toward higher-value work.
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