STRL
STRL
Hold 2026-03-12
Model
DCF
Price at Report
$420.60
Base IV
$444.00
Bear IV
$211.26
Bull IV
$747.01
Entry Zone: 222-408 · Sell Above: 635
Bore Family Office
Valuation Report — Sterling Infrastructure (STRL) • March 12, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 10.00% • Current Price: $420.60
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Sterling Infrastructure is a leading provider of e-infrastructure, transportation, and building solutions across the United States. The company has strategically pivoted from traditional heavy civil construction to high-margin data center and e-infrastructure work, capitalizing on the AI-driven hyperscaler buildout. Sterling's diversified revenue base spans data center foundations/slabs (E-Infrastructure), highways and roads (Transportation), and residential/commercial concrete (Building Solutions), with E-Infrastructure now the dominant profit driver. Its asset-light model, strong FCF conversion, and expanding backlog differentiate it from capital-heavy peers.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| E-Infrastructure (Data Centers) | $1,157M | 46% | +35.0% | — | AI data center foundations — highest margin segment, key growth driver |
| Transportation | $808M | 32% | +8.0% | — | Highway, road, and bridge construction; stable government-funded backlog |
| Building Solutions | $525M | 21% | +5.0% | — | Residential and commercial concrete; lower-margin but cash generative |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $1,414 | $1,769 | $1,972 | $2,116 | $2,490 |
| EBITDA ($M) | $141 | $212 | $298 | $380 | $446 |
| Operating Income ($M) | $107 | $160 | $241 | $311 | $369 |
| Net Income ($M) | $63 | $106 | $139 | $257 | $290 |
| EPS (diluted) | $2.15 | $3.48 | $4.44 | $8.27 | $9.38 |
| Free Cash Flow ($M) | $112 | $158 | $414 | $416 | $363 |
| Annual DPS | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 |
| Total Debt ($M) | $472 | $491 | $399 | $369 | $350 |
| Rev YoY Growth | — | +25.1% | +11.5% | +7.3% | +17.7% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 1.300 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 11.45% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 6.00% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 4.40% | × (1 − 26%) |
| Weight Equity (We) | 76.0% | Mkt cap $0.0B |
| Weight Debt (Wd) | 24.0% | Gross debt $0.0B |
| WACC | 10.00% | DCF discount rate |
📈 DCF Scenarios
$211
🔴 Bear
$444
📊 Base
$747
🚀 Bull
$420.60
Current Price
$443
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 8.0% | 5.0% | 2.0% | 10.00% | $211 | ▼49.8% |
| 📊 Base | 20.0% | 12.0% | 2.5% | 10.00% | $444 | ▲5.6% |
| 🚀 Bull | 28.0% | 17.0% | 3.0% | 10.00% | $747 | ▲77.6% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 8.0% | Stage 2: 5.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.39B | $0.36B | $0.36B |
| Year 2 | Stage 1 | $0.42B | $0.35B | $0.71B |
| Year 3 | Stage 1 | $0.46B | $0.34B | $1.05B |
| Year 4 | Stage 1 | $0.49B | $0.34B | $1.39B |
| Year 5 | Stage 1 | $0.53B | $0.33B | $1.72B |
| Year 6 | Stage 2 | $0.56B | $0.32B | $2.03B |
| Year 7 | Stage 2 | $0.59B | $0.30B | $2.34B |
| Year 8 | Stage 2 | $0.62B | $0.29B | $2.62B |
| Year 9 | Stage 2 | $0.65B | $0.27B | $2.90B |
| Year 10 | Stage 2 | $0.68B | $0.26B | $3.16B |
| Terminal | — | TV=$8.7B | PV(TV)=$3.3B (51% of EV) | EV=$6.5B |
Base Scenario
Stage 1: 20.0% | Stage 2: 12.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.44B | $0.40B | $0.40B |
| Year 2 | Stage 1 | $0.52B | $0.43B | $0.83B |
| Year 3 | Stage 1 | $0.63B | $0.47B | $1.30B |
| Year 4 | Stage 1 | $0.75B | $0.51B | $1.81B |
| Year 5 | Stage 1 | $0.90B | $0.56B | $2.37B |
| Year 6 | Stage 2 | $1.01B | $0.57B | $2.95B |
| Year 7 | Stage 2 | $1.13B | $0.58B | $3.53B |
| Year 8 | Stage 2 | $1.27B | $0.59B | $4.12B |
| Year 9 | Stage 2 | $1.42B | $0.60B | $4.72B |
| Year 10 | Stage 2 | $1.59B | $0.61B | $5.34B |
| Terminal | — | TV=$21.8B | PV(TV)=$8.4B (61% of EV) | EV=$13.7B |
Bull Scenario
Stage 1: 28.0% | Stage 2: 17.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.46B | $0.42B | $0.42B |
| Year 2 | Stage 1 | $0.59B | $0.49B | $0.91B |
| Year 3 | Stage 1 | $0.76B | $0.57B | $1.49B |
| Year 4 | Stage 1 | $0.97B | $0.67B | $2.15B |
| Year 5 | Stage 1 | $1.25B | $0.77B | $2.93B |
| Year 6 | Stage 2 | $1.46B | $0.82B | $3.75B |
| Year 7 | Stage 2 | $1.71B | $0.88B | $4.63B |
| Year 8 | Stage 2 | $2.00B | $0.93B | $5.56B |
| Year 9 | Stage 2 | $2.34B | $0.99B | $6.55B |
| Year 10 | Stage 2 | $2.73B | $1.05B | $7.60B |
| Terminal | — | TV=$40.2B | PV(TV)=$15.5B (67% of EV) | EV=$23.1B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.0% | $565 | $598 | $637 | $683 | $740 |
| 8.5% | $517 | $544 | $576 | $613 | $658 |
| 9.0% | $477 | $499 | $525 | $555 | $591 |
| 9.5% | $441 | $460 | $482 | $506 | $536 |
| 10.0% | $410 | $426 | $444 | $465 | $489 |
| 10.5% | $382 | $396 | $411 | $429 | $449 |
| 11.0% | $358 | $370 | $383 | $397 | $414 |
| 11.5% | $336 | $346 | $357 | $370 | $384 |
| 12.0% | $316 | $325 | $335 | $346 | $358 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Price | Fwd P/E | EV/EBITDA | P/FCF | Yield | Consensus |
|---|---|---|---|---|---|---|
| Sterling Infrastructure | $421 | 35.3× | 12.8× | 36× | 0.0% | Buy |
| Dycom Industries (DY) | $184 | 18.5× | 9.2× | 22× | 0.0% | Buy |
| Granite Construction | $73 | 14.2× | 6.8× | 18× | 0.6% | Hold |
| MYR Group (MYRG) | $108 | 15.8× | 7.4× | 16× | 0.0% | Hold |
| AECOM (ACM) | $105 | 17.9× | 9.1× | 21× | 0.8% | Buy |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.15 | — | — | — | Actual |
| 2022 | $3.48 | — | — | — | Actual |
| 2023 | $4.44 | — | — | — | Actual |
| 2024 | $8.27 | — | — | — | Actual |
| 2025 | $9.38 | — | — | — | Actual |
| 2026 | $9.62 | $11.92 | $13.37 | 9 | Estimate |
| 2027 | $13.41 | $14.21 | $14.97 | 8 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $1.4B | — | — | — | Actual |
| 2022 | $1.8B | — | — | — | Actual |
| 2023 | $2.0B | — | — | — | Actual |
| 2024 | $2.1B | — | — | — | Actual |
| 2025 | $2.5B | — | — | — | Actual |
| 2026 | $2.7B | $3.0B | $3.3B | 9 | Estimate |
| 2027 | $3.0B | $3.4B | $3.8B | 8 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $443.33 | Range $348–$500
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Brent Thielman | DA Davidson | Strong Buy | $500 | +18.9% |
| Manish Somaiya | Cantor Fitzgerald | Buy | $482 | +14.6% |
| Alexander Rygiel | Texas Capital Securities | Hold | $348 | -17.3% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q1 2025 | $1.85 vs $1.72 | +$0.13 ✅ | $0.6B vs $0.5B | +$0.0B ✅ | Raised |
| Q2 2025 | $2.30 vs $2.11 | +$0.19 ✅ | $0.6B vs $0.6B | +$0.0B ✅ | Raised |
| Q3 2025 | $2.56 vs $2.41 | +$0.15 ✅ | $0.7B vs $0.7B | +$0.0B ✅ | Raised |
| Q4 2025 | $2.67 vs $2.48 | +$0.19 ✅ | $0.6B vs $0.6B | +$0.0B ✅ | Raised |
(e) Confidence Band Commentary
Tight PT range ($348–$500) with strong Buy consensus — only 3 analysts cover STRL, suggesting under-coverage for a company this size. Four consecutive EPS beats with guidance raised each quarter in 2025. High estimate reliability: forward EPS estimates have only been revised upward for 8 consecutive quarters. The single Hold rating (Texas Capital, $348) reflects valuation concern at 35× PE, not a thesis change.
💡 Investment Thesis
- AI infrastructure super-cycle: Sterling is the dominant contractor for data center foundations and site preparation — hyperscalers (Google, Microsoft, Amazon, Meta) are committing $500B+ to AI infrastructure through 2030, and Sterling is uniquely positioned to capture this work.
- Margin expansion trajectory: Operating margins expanded from 7.6% (2021) to 14.8% (2025) and continue rising as E-Infrastructure mix grows. Gross margins now at 23% vs 14% four years ago.
- Asset-light FCF machine: $363M FCF in FY2025 on $2.49B revenue = 14.6% FCF margin. Net cash positive balance sheet ($41M). No major capex required to grow — labor and contracts, not factories.
- Backlog visibility: Significant contract backlog and pipeline visibility driven by multi-year data center commitments provides revenue predictability uncommon in construction.
- Analyst consensus Buy: All 3 covering analysts rate Buy/Strong Buy with average PT $443. DA Davidson recently raised to $500 after Q4 2025 results beat.
⚖️ DCF Verdict: Hold — Sterling Infrastructure (STRL)
Current price: $420.60 | Analyst Avg PT: $443.33
$211
🔴 Bear
$444
📊 Base
$747
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$408 | Begin position |
| Tier 2 — Add | ≤$328 | Add on weakness |
| Tier 3 — Full | ≤$222 | Full allocation |
| Sell Alert | ≥$635 | Above fair value — consider trimming |
Sterling Infrastructure is a high-conviction growth story trading at 35× forward earnings, a premium warranted by its data center exposure and margin trajectory. At $421, STRL is trading near the analyst consensus PT of $443 with 5% implied upside to Base IV of $444. Hold and Add on Pullbacks. Attractive entry below $380 where risk/reward improves to 2:1. Full position sizing justified below $350. Becomes cautious if data center capex cycle decelerates.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 493.0 |
| Average Cost Basis | $41.80 |
| Current Market Value | $207,356 |
| Unrealized P&L | $+186,748 (+906.2%) |
| Annual DPS | — (not provided) |
| Annual Dividend Income | — (DPS missing) |
| Current Yield (at price) | — |
| Yield on Cost | — |
| vs Target (~$200K) | $207,356 / $200,000 (104%) |
Bore Family Office • Analysis generated by Lurch • Not investment advice.