STRL

We rate STERLING INFRASTRUCTURE, INC. (STRL) as a Hold with a composite score of 56.1/100 at a current price of $454.66. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (85th percentile) and quality (63th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (22th percentile) and stability (30th percentile) tempers our overall conviction. We assign a Narrow Moat rating (56/100), High uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

STERLING INFRASTRUCTURE, INC. holds a mid-tier position (#37 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 56.1/100 places it at rank #1132 in our full 7,333-stock universe. With a $10.3B market capitalization, STERLING INFRASTRUCTURE, INC. operates at meaningful scale within the Construction sector, providing competitive advantages in distribution, procurement, and customer reach.

The near-term outlook is constructive, with revenue growing at 18% and momentum in the 85th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 22th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 23% (-0.8pp vs sector) narrow to operating margins of 16% (+8.4pp vs sector) and net margins of 11.9%, yielding a gross-to-net conversion rate of 52%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $454.66, STERLING INFRASTRUCTURE, INC. is trading at a premium to fundamental value. Our value factor score of 33/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 47.2x (a 147% premium to the sector median of 19.1x), EV/EBITDA of 35.8x (at a premium), P/B of 12.3x, P/S of 5.8x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to STERLING INFRASTRUCTURE, INC.. Key risk factors include elevated market sensitivity (beta of 1.70), significant leverage (136% debt-to-equity), below-average price stability (30th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.70); significant leverage (136% debt-to-equity); below-average price stability (30th percentile); elevated valuation multiple (P/E 47.2x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 30th percentile and quality factor at the 63th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate STERLING INFRASTRUCTURE, INC.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 26.1%, and the balance sheet is managed within acceptable parameters (D/E: 136%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; STERLING INFRASTRUCTURE, INC. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, STERLING INFRASTRUCTURE, INC. receives a Hold rating with a composite score of 56.1/100 (rank #1132 of 7,333). Our quantitative framework assigns a Narrow Moat (56/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 47/100.

Our analysis supports a neutral stance on STERLING INFRASTRUCTURE, INC.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.