Time to Buy the Surge in These Infrastructure Stocks?
It’s no secret that infrastructure-related companies will start to prosper in correlation with President Biden’s $1.2 trillion Bipartisan Infrastructure bill.
The services of many infrastructure-related companies are in high demand and a few of these stocks have started to pop after reporting their Q2 results this month.
Sterling Infrastructure STRL and Willdan Group WLDN are notable names that were able to beat earnings expectations and have seen their stocks spike. With that being said, let’s see if now is a good time to buy into the rally.
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Willdan Q2 Review: Reporting second-quarter earnings last Thursday, Willdan Group showed it's thriving from a booming business environment in regard to infrastructure-related activities.
To that point, Willdan offers services that include electric grid solutions, energy efficiency, and sustainability. The company’s Q2 earnings of $0.26 per share blasted expectations of $0.12 a share by 116%. Plus, this soared from an adjusted loss of -$0.06 a share in Q2 2022.
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Second-quarter sales of $119.08 million leaped 16% year over year despite missing top-line estimates by 4%. Still, CEO Tom Brisbin stated Willdan is experiencing strength across all areas of its business resulting in improved profitability.
Furthermore, cash generated from operations in the first half of the year has positioned Willdan to restart its share acquisition program while also raising its full-year guidance for all financial targets.
This caused shares of Willdan to rally with many analysts beginning to raise their price targets. Notably, Willdan stock currently boasts a Zacks Rank #1 (Strong Buy) and its Engineering-R and D Services Industry is in the top 26% of over 250 Zacks industries.
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Sterling Q2 Review: Sterling Infrastructure also belongs to the top-rated Engineering-R and D Services Industry and reported its Q2 results on Monday. The E-Infrastructure, building and transportation solutions company saw Q2 earnings soar 47% from the prior-year quarter to $1.27 per share. This was a quarterly record for earnings and impressively topped Q2 estimates of $0.93 a share by 36%.
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On the top line, Q2 sales of $522.33 million were up 2% YoY and topped expectations by 6%. CEO Joe Cutillo highlighted that Sterling’s 230 basis points of gross margin and nearly 30% growth in EBITDA during the quarter reflect the company’s successful strategic shift toward higher-margin and lower-risk opportunities.
Sterling stock has soared 26% since its Q2 report with the company raising its fiscal 2023 EPS guidance to between $4-$4.20, up from $3.33-$3.53. With that being said, a buy rating could be on the way but Sterling stock currently lands a Zacks Rank #3 (Hold) after such an extensive rally.
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Other Stocks to Watch
Other infrastructure-related stocks to watch among the Zacks Engineering-R and D Services Industry include Aecom ACM and Quanta Services PWR. Aecom reported its quarterly results on Monday with Quanta reporting last Thursday.
While both companies came up slightly short of earnings estimates they beat on the top line and offer exposure to international infrastructure activities along with the U.S. The outlook remains favorable for Aecom and Quanta stock, solid annual top and bottom line growth is expected and they land a Zacks Rank #2 (Buy) at the moment.
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Willdan Group, Inc. (WLDN) : Free Stock Analysis Report
Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report
Quanta Services, Inc. (PWR) : Free Stock Analysis Report
AECOM (ACM) : Free Stock Analysis Report
