Core Insights - U.S. stock indices rose over 1.5% on August 22, 2025, following Federal Reserve Chair Jerome Powell's indication of a potential interest rate cut next month, leading to increased trader optimism and a notable rise in Wall Street [1][10] Investment Strategy - Investors are encouraged to consider low-leverage stocks such as NatWest Group, Sterling Infrastructure, Luxfer Holdings, Evercore, and Hillman Solutions Corp. as safer investment options due to their lower risk profile [2][10] - The focus on low-leverage stocks is based on the understanding that companies with excessive debt financing may face significant losses during economic downturns [5][6] Low-Leverage Stocks - Leverage refers to the practice of borrowing capital for operations and expansion, typically through debt financing, which can pose risks if returns do not exceed interest costs [4][5] - A lower debt-to-equity ratio indicates improved solvency and reduced financial risk for a company, making it a crucial metric for investors [7][9] Company Highlights - **NatWest Group (NWG)**: Announced a £140 million lending for essential upgrades to the UK's Haweswater Aqueduct, with a projected 20.1% sales improvement for 2025 and a long-term earnings growth rate of 10.9% [15][16] - **Sterling Infrastructure (STRL)**: Reported a 21% year-over-year revenue increase and a 40.8% surge in earnings per share for Q2 2025, with a projected 45.9% earnings improvement for 2025 [17][18] - **Luxfer Holdings (LXFR)**: Achieved a 5.8% increase in adjusted net sales and a 25% rise in adjusted earnings per share for Q2 2025, with a long-term earnings growth rate of 8% [19][20] - **Evercore (EVR)**: Reported a 20.7% increase in adjusted revenues and a 30.4% rise in earnings for Q2 2025, with a projected 15.9% sales improvement for 2025 [20][21] - **Hillman Solutions (HLMN)**: Experienced a 6.2% sales increase and a 6.3% growth in adjusted earnings per share for Q2 2025, with a projected 6.6% sales improvement for 2025 [22][23]

Core Insights - The article compares Babcock International Group PLC (BCKIY) and Sterling Infrastructure (STRL) to determine which stock is more attractive to value investors [1] - Both companies currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and an improving earnings outlook [3] Valuation Metrics - BCKIY has a forward P/E ratio of 18.29, while STRL has a higher forward P/E of 31.24 [5] - The PEG ratio for BCKIY is 1.33, suggesting a more favorable valuation relative to its expected earnings growth compared to STRL's PEG ratio of 2.08 [5] - BCKIY's P/B ratio is 8.7, compared to STRL's P/B ratio of 9.28, indicating that BCKIY is relatively undervalued based on book value [6] Value Grades - Based on the valuation metrics, BCKIY holds a Value grade of B, while STRL has a Value grade of D, suggesting that BCKIY is the superior value option at this time [6][7]

Core Insights - Sterling Infrastructure, Inc. (STRL) is facing challenges due to weakness in the U.S. housing market, leading to a 7.6% year-over-year decline in its Building Solutions segment revenues to $199.3 million in the first half of 2025 [1][9] - The decline in the residential market is being offset by strong growth in the E-Infrastructure Solutions segment, which saw a 24.2% year-over-year increase in revenues to $528.7 million, contributing 51% to total revenues [2][9] - STRL's backlog in the E-Infrastructure Solutions segment increased by 44% year-over-year to $1.2 billion, driven by mission-critical projects such as data centers and manufacturing [2][9] Company Developments - STRL has agreed to acquire CEC Facilities Group, LLC, a specialty electrical and mechanical contractor, expected to close by Q3 2025, which will enhance STRL's capabilities in mission-critical services [3][4] - The acquisition is anticipated to create synergies that will help mitigate the impact of the housing market's softness and improve STRL's prospects [4] Competitive Landscape - STRL faces competition from firms like EMCOR Group and MasTec Inc. in the public infrastructure sector [5] - EMCOR reported Remaining Performance Obligations (RPOs) of $11.91 billion, reflecting 22% organic growth and 32.4% growth including acquisitions [6] - MasTec's backlog reached $16.45 billion, marking a 23.3% year-over-year increase, driven by demand in AI, cloud computing, and data storage [7] Stock Performance and Valuation - STRL's stock has surged 62.5% year-to-date, outperforming the Zacks Engineering - R and D Services industry and the S&P 500 index [8] - The stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 29.27, indicating a premium valuation compared to industry peers [10] - Earnings estimates for 2025 and 2026 have trended upward, with projected growth rates of 45.9% and 9.4% year-over-year, respectively [12]

Core Insights - Sterling Infrastructure, Inc. (STRL) reported strong second-quarter 2025 results, with earnings exceeding estimates by 19% and revenues by 10.7% [1] - Adjusted diluted earnings per share increased by 41% year-over-year to $2.69, while revenues rose by 21% [1][2] Financial Performance - The company experienced significant growth in E-Infrastructure Solutions and Transportation Solutions, which compensated for a decline in the Building Solutions segment [2] - Gross margin expanded by 400 basis points to 23%, achieving a new high due to a shift towards higher-margin services [2] - Adjusted EBITDA increased by 35% compared to the prior year [2] Stock Performance - STRL shares gained 51.4% over the past three months, outperforming the Zacks Engineering - R and D Services industry's 11.3% and the S&P 500's 8.8% [5] - The stock has shown a consistent upward trend since the second-quarter results announcement, rising 6.6% [5] E-Infrastructure Solutions - E-Infrastructure Solutions led revenue growth with a 29% increase, doubling data center sales and achieving margins of 28% [8][9] - The backlog for E-Infrastructure reached $1.2 billion, up 44% year-over-year, indicating strong future revenue visibility [10][11] - Data center revenues more than doubled, with e-commerce distribution backlog increasing nearly 700% year-over-year [10] Transportation Solutions - The Transportation Solutions segment backlog stood at $715 million, up 5% year-over-year, with expectations for revenue growth in the low-to-mid teens for 2025 [13][14] - The company is downsizing low-bid heavy highway operations in Texas, which is expected to create a more profitable mix [14] Acquisition Strategy - Sterling is advancing its E-Infrastructure platform through the pending $505 million acquisition of CEC Facilities Group, which will enhance its service offerings [15][16] - The integration is expected to create cross-selling opportunities and expand the company's geographic footprint [16] Analyst Outlook - Earnings estimates for 2025 have been revised upward to $8.90 per share, reflecting a growth of 45.9% year-over-year [17] - STRL is currently trading at a premium compared to its industry peers, with a forward P/E ratio above its five-year average [19][21] Conclusion - The strong second-quarter results, growing backlog, and strategic acquisitions position Sterling for long-term growth [22] - Despite trading at a premium, the stock's performance and favorable growth drivers justify its valuation, making it an attractive option for investors [23]

Core Insights - Willdan Group and Sterling Infrastructure exceeded Q2 expectations, reporting record revenue and net income driven by strong performance in high-growth infrastructure sectors [1][2] - Both companies raised their full-year guidance following strong Q2 results, indicating confidence in continued growth [3] Willdan Group Summary - Willdan raised its full-year targets for net revenue to $340-$350 million, Adjusted EPS to $3.50-$3.65, and Adjusted EBITDA to $70-$73 million [4] - The company secured significant contracts, including a $30 million deal with the City of Fairfield and a $20 million contract with National Grid [4] - Willdan's stock has increased nearly +200% year to date, with a three-year growth of over +380% [9] Sterling Infrastructure Summary - Sterling raised its full-year revenue guidance to $2.10-$2.15 billion, net income to $243-$252 million, and adjusted EPS to $9.21-$9.47 [5] - The company has a backlog exceeding $2 billion, focusing on high-margin projects in states like Utah, Colorado, and Texas [5] - Sterling's stock has risen over +70% year to date, with a three-year increase of over +260% [9] Strategic Acquisitions - Both companies are expanding into data center infrastructure, capitalizing on advancements in artificial intelligence [6] - Willdan acquired Alternative Power Generation to enhance its capabilities for AI data centers and EV charging stations [7] - Sterling plans to acquire CEC Facilities Group to expand its electrical contracting services for semiconductors and data centers [8] Valuation Analysis - Both companies forecast high-double digit EPS growth, with Sterling having a P/E valuation of 34X forward earnings compared to Willdan's 40.3X [10] - Willdan's stock is closer to an optimal sales level of less than 2X, while Sterling's is at 4.3X [11] - Despite raising guidance, Willdan's top line is expected to dip at least 38% after a record year, while Sterling is projected to maintain or reach peak annual sales [11] Conclusion - Willdan Group and Sterling Infrastructure are positioned as top engineering companies for investment, with Sterling's stronger financials offering more appeal [12] - Both companies' ventures into data center infrastructure suggest long-term viability as investments [13]

Core Insights - Sterling Infrastructure, Inc. (STRL) is experiencing growth due to strong demand in public infrastructure, particularly in data center construction, AI infrastructure, and utility grid modernization [1] - The company is pursuing inorganic growth through strategic acquisitions, exemplified by its agreement to acquire CEC Facilities Group, LLC, which is expected to enhance its service capabilities [2] Financial Performance - The E-Infrastructure Solutions segment accounted for 51% of Sterling's total revenues, which grew by 24.2% year-over-year to $528.7 million [3] - The backlog for E-Infrastructure Solutions increased by 44% year-over-year to $1.2 billion, driven by mission-critical projects such as data centers and manufacturing [3] Market Position and Competition - The acquisition of CEC Facilities is anticipated to improve revenue visibility and profitability for Sterling, while also allowing entry into new markets [4] - STRL shares have surged by 117.6% over the past six months, outperforming competitors like Quanta Services, Inc. (PWR) and AECOM (ACM), which gained 29.7% and 14.7%, respectively [5][9] Valuation Metrics - Sterling's stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 32.17, indicating a premium compared to industry peers [10] - Quanta Services and AECOM have forward P/E ratios of 33.57 and 20.83, respectively [11] Earnings Estimates - Earnings estimates for STRL have been revised upward for 2025 and 2026, now projected at $8.90 and $9.74 per share, reflecting year-over-year growth of 45.9% and 9.4% [12] - Current quarter and next quarter earnings estimates are $2.72 and $2.10, respectively [13]

Group 1 - Granite Construction (GVA) is one of 88 companies in the Construction group, currently ranked 13 within the Zacks Sector Rank [2] - The Zacks Rank system focuses on earnings estimates and revisions, with Granite Construction holding a Zacks Rank of 2 (Buy) [3] - The Zacks Consensus Estimate for GVA's full-year earnings has increased by 2.7% in the past quarter, indicating improved analyst sentiment [4] Group 2 - Year-to-date, Granite Construction has gained approximately 20.9%, outperforming the average gain of 6.3% in the Construction group [4] - Granite Construction belongs to the Building Products - Heavy Construction industry, which is ranked 1 in the Zacks Industry Rank, but GVA is slightly underperforming its industry with an average gain of 31.1% [6] - Another notable stock in the Construction sector is Sterling Infrastructure (STRL), which has increased by 79.7% year-to-date and has a Zacks Rank of 2 (Buy) [5][7]

Group 1 - Sterling Infrastructure (STRL) has an average brokerage recommendation (ABR) of 1.00, indicating a Strong Buy based on recommendations from three brokerage firms, all of which are Strong Buy [2][5] - The ABR should not be the sole basis for investment decisions, as studies show limited success of brokerage recommendations in predicting stock price increases [5][10] - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, with five "Strong Buy" recommendations for every "Strong Sell" [6][10] Group 2 - The Zacks Rank, a proprietary stock rating tool, is a reliable indicator of a stock's near-term price performance, classifying stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) [8][11] - The Zacks Rank is based on earnings estimate revisions, which have a strong correlation with near-term stock price movements, unlike the ABR which may not be up-to-date [9][13] - For Sterling Infrastructure, the Zacks Consensus Estimate for the current year has increased by 8.8% to $8.9, indicating growing optimism among analysts regarding the company's earnings prospects [14][15]

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting the use of a specific screening strategy to identify stocks with strong fundamentals and positive price momentum. Group 1: Trend Analysis - The trend in short-term investing is crucial, and confirming its sustainability is essential for profitability [1][2] - A unique screening strategy called "Recent Price Strength" helps identify stocks with sufficient fundamental strength to maintain their upward trend [3] Group 2: Stock Performance - Sterling Infrastructure (STRL) has shown a solid price increase of 60.5% over the past 12 weeks, indicating strong investor interest [4] - STRL has also increased by 25.2% over the last four weeks, suggesting that the upward trend is still intact [5] - The stock is currently trading at 91.5% of its 52-week high-low range, indicating a potential breakout [5] Group 3: Fundamental Strength - STRL holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6] - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term performance [7] Group 4: Additional Insights - Besides STRL, there are other stocks that meet the criteria of the "Recent Price Strength" screen, suggesting further investment opportunities [8] - The article encourages utilizing various Zacks Premium Screens tailored to different investing styles to identify winning stock picks [8]

Financial Data and Key Metrics Changes - Revenue grew by 21% in the quarter, with adjusted earnings per share increasing by 41% to $2.69 and adjusted EBITDA rising by 35% to $126 million [7][8] - Gross profit margin expanded by 400 basis points to 23.3%, and operating cash flow was strong at $85 million [9] - Backlog at the end of the quarter totaled $2 billion, a 24% year-over-year increase [10] Business Line Data and Key Metrics Changes - Infrastructure Solutions revenue grew by 29% year-over-year, with adjusted operating income increasing by 57% and operating margins reaching 28% [11][12] - Transportation Solutions revenue increased by 24%, with adjusted operating profit growing by 78% [13] - Building Solutions segment revenue declined by 1%, with adjusted operating income down by 28% due to challenges in the housing market [14] Market Data and Key Metrics Changes - The data center market was a primary growth driver, with revenue from this market more than doubling year-over-year [12] - E-commerce distribution backlog saw a significant increase of nearly 700% in the quarter [32] - Transportation Solutions backlog was $715 million, reflecting a 5% year-over-year increase but a 17% sequential decline [13] Company Strategy and Development Direction - The company is focused on expanding its geographic footprint and enhancing service offerings through the acquisition of CEC Facilities Group [10][11] - The strategy emphasizes building upon existing strengths in high-margin markets and pursuing attractive growth opportunities [9][10] - The company aims to capture more value across the full life cycle of facilities by integrating services [11] Management's Comments on Operating Environment and Future Outlook - Management remains positive about future growth, particularly in e-infrastructure solutions, anticipating continued demand in data centers [20][22] - The company expects to deliver e-infrastructure revenue growth of 18% to 20% and adjusted operating profit margins in the mid to high 20% range for 2025 [22] - Building Solutions is expected to face challenges in the near term, with a forecasted mid to high single-digit decline in revenue [25] Other Important Information - The company has a strong liquidity position with $699.4 million in cash and a net cash balance of $401.2 million after debt [18] - The guidance for 2025 has been increased, projecting revenue of $2.1 billion to $2.15 billion and adjusted diluted EPS of $9.21 to $9.47 [19] Q&A Session Summary Question: Will significant data center projects land in core markets? - Management believes they are well-positioned for a large percentage of the upcoming data center capital projects [30] Question: Will additional acquisitions be needed for expansion into Texas and the Northwest? - The company plans to pursue both organic growth and potential acquisitions to establish a presence in these markets [34] Question: What is the status of e-commerce opportunities? - Several e-commerce projects are expected to start in the back half of the year, with larger warehouse projects anticipated to provide significant revenue [46] Question: How does the competitive environment look? - The company faces competition primarily from local contractors, but believes its integrated services will provide a competitive edge [61][62] Question: When is the CEC acquisition expected to close? - The acquisition is progressing well, with most licensing and permitting processes underway, but timing is dependent on state agencies [68]