Sterling Infrastructure (STRL): Assessing Valuation After CEC Deal, Buyback Plan and Growth in Mission-Critical Projects

Sterling Infrastructure (STRL) is back on radar after a string of real business moves, from the CEC Facilities acquisition to a hefty buyback plan, all amid intense demand in data center and infrastructure projects.

See our latest analysis for Sterling Infrastructure.

Despite a choppy past month, with a roughly 13 percent 1 month share price return decline, Sterling’s 16 percent 3 month share price gain and powerful multi year total shareholder returns suggest that momentum is consolidating rather than fading at its latest 332.29 dollars level.

If the CEC deal and buyback have you thinking about where growth capital might head next, this is a good moment to explore fast growing stocks with high insider ownership.

After a 90 percent plus year to date rally, a premium price tag to historic levels, and a big buyback in the background, the question is clear: is this still a buying opportunity, or is the market already pricing in Sterling’s future growth?

Most Popular Narrative: 26.7% Undervalued

With the most followed narrative placing fair value well above Sterling Infrastructure’s last close, the valuation debate now hinges on how durable today’s growth really is.

The analysts have a consensus price target of $313.0 for Sterling Infrastructure based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $355.0, and the most bearish reporting a price target of just $254.0.

Read the complete narrative.

Curious how modest earnings growth, shifting margins, and a richer future multiple can still justify a meaningfully higher fair value? See how those levers interact beneath the surface.

Result: Fair Value of $453.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, a slowdown in mega-project awards or stumbles integrating CEC Facilities could quickly challenge assumptions about Sterling’s backlog durability and future margins.

Find out about the key risks to this Sterling Infrastructure narrative.

Another Angle on Value

Our SWS DCF model points the other way, with a fair value of 312.47 dollars versus the current 332.29 dollars price, implying Sterling might be slightly overvalued. If cash flows matter more than sentiment and backlogs, how much upside is really left?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Sterling Infrastructure for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 909 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Sterling Infrastructure Narrative

If you see the story differently or want to dive into the numbers yourself, you can build a custom view in just a few minutes: Do it your way.

A great starting point for your Sterling Infrastructure research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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