Sterling (STRL) to Report Q4 Earnings: Factors to Consider
Sterling Construction Company, Inc. STRL is slated to report fourth-quarter 2023 results on Feb 26, after the closing bell.
In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 0.8% and increased 25% year over year. Revenues increased 13.7% year over year but missed the consensus mark by 0.2%.
The company’s earnings surpassed expectations in three of the trailing four quarters and missed on one occasion, the average surprise being 12.2%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for Sterling’s fourth-quarter earnings per share is pegged at $1.00, suggesting a rise of 51.5% from the year-ago quarter’s figure of 66 cents.
Sterling Infrastructure, Inc. Price and EPS Surprise
Sterling Infrastructure, Inc. price-eps-surprise | Sterling Infrastructure, Inc. Quote
The consensus estimate for revenues is pegged at $526.9 million, indicating a 17.5% increase from the prior-year period.
Factors to Note
Sterling's fourth-quarter performance is expected to have benefited from its strategic emphasis on higher-margin, lower-risk projects. Also, its business transformation efforts to establish itself as a prominent specialty infrastructure provider are likely to have added to the positives.
The diversified portfolio, encompassing Transportation Solutions, E-Infrastructure Solutions, and Building Solutions divisions, is likely to have provided a favorable backdrop, mitigating market risks. Sterling has been actively executing a strong pipeline of projects for prominent clients engaged in the construction of new distribution centers, data centers, and warehouses.
Segment-wise, the E-infrastructure Solutions business is likely to have gained from bolt-on acquisitions, high levels of demand from data centers and advanced manufacturing customers.
The Building Solutions segment is likely to have witnessed soft demand, especially from the residential market, thanks to inflationary pressure and interest rate hikes. Nonetheless, higher levels of commercial work are likely to somewhat offset these negatives.
The Transportation Solutions segment is likely to have gained from an increase in non-highway service revenues. The rising demand for infrastructural activities for public project work and a continued mix shift toward higher margin work are expected to have supported growth.
However, challenges related to inflation, seasonality, and potential material delays might have exerted pressure on its fourth-quarter results.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Sterling this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Sterling has an Earnings ESP of +1.00% and carries a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Recent Construction Releases
AECOM ACM reported decent results for first-quarter fiscal 2024, with earnings surpassing the Zacks Consensus Estimate. On a year-over-year basis, the top and bottom lines increased, backed by solid organic net service revenues (NSR) growth in its design business.
ACM anticipates generating 8-10% organic NSR growth in fiscal 2024. It expects adjusted earnings in the range of $4.35-$4.55 per share. This indicates a 20% improvement from the fiscal 2023 levels on a constant-currency basis, considering the mid-point of the guidance.
Martin Marietta Materials, Inc. MLM reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover as demand still exceeds supply, particularly in its key markets.
Vulcan Materials Company VMC reported strong results for fourth-quarter 2023, wherein earnings and revenues surpassed their respective Zacks Consensus Estimate. On a year-over-year basis, both metrics increased year over year.
This performance can be attributed to the consistent strategic execution and the strong performance of its aggregates-led business. Additionally, large industrial projects contributed to its better-than-expected results.
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