Follow Sterling Infrastructure to never miss an important update.
After Sterling Infrastructure reported its October results, we updated our fair value. We changed our rating from Buy to Watch. We added the declining profit in the building solutions business to the risks we track. We have also started monitoring how the company splits its cash between paying down debt and buying back its own shares.
Cantor Fitzgerald kept its overweight rating on the stock and set a price target of $565. This is well below the average analyst target of $702, but still significantly higher than where the stock trades today. Two other firms, DA Davidson and Argus Research, also weighed in after the recent earnings report by keeping their buy ratings. While the stock has fallen recently, analysts generally remain positive on the company's shift toward building high-margin data centers and chip plants.
Source: Cantor Fitzgerald
Sterling reported record results for the third quarter, with revenue jumping 127 percent to $1.56 billion. This easily beat the $1.19 billion analysts expected. Profits also came in strong at $7.58 per share, well ahead of the $6.20 estimate, as the company successfully shifts its focus from low-margin road work to complex infrastructure for big tech companies.
Management raised its financial goals for the full year following the results. The business is benefiting from a massive build-out of data centers and semiconductor factories, which require the specialized site preparation and power systems Sterling provides. Even though the stock fell after the report, the underlying business is growing at its fastest pace ever with record levels of cash on hand.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Sterling appointed Katherine Hargis as Senior Vice President and General Counsel. She will also serve as the Chief Compliance Officer and Corporate Secretary, taking over the role from Mark D. Buras.
While this is a senior leadership change, it appears to be an orderly transition. For a company managing large-scale construction contracts and complex regulatory requirements, the General Counsel plays an important role in managing risk, but the move does not change the company's broader growth strategy.
Source: PRNewsWire
Management has beaten their own profit targets for eight straight quarters, often by wide margins, showing they are consistently underestimating how fast the data center boom is pulling them forward.
| Expectation | |
|---|---|
| EPS | $4.76 |
| Revenue | $1.11B |
Follow Sterling Infrastructure to get the latest and most important updates.
Follow STRL