Why Shares Of Sterling Infrastructure Are Soaring This Week
Rebounding from the 4.5% decline they suffered last week, shares of Sterling Infrastructure (NASDAQ: STRL) are flying off the shelves this week after the company reported strong first-quarter 2024 financial results. In addition to beating analysts' top- and bottom-line estimates, the infrastructure company provided guidance for a more profitable 2024 than what analysts expect. And that's only some of the auspicious news the company had to report.
According to data provided by S&P Global Market Intelligence, Sterling's stock is up 23.7% from the end of trading last Friday through the close of Thursday's trading session.
A strong backlog bodes well for 2024 and into 2025
Whereas analysts expected it to report revenue of $412.8 million and earnings per share (EPS) of $0.77 for Q1 2024, Sterling announced sales of $440.4 million and EPS of $1. And management suggested it could've trumped analysts' estimates even more. In the company's press release announcing the quarterly results, Joe Cutillo, Sterling's CEO, said, "Had the weather cooperated, the quarter would have been even better."
It wasn't only the income statement where Sterling shined. The company reported a backlog of $2.35 billion at the end of the quarter, representing a 45% year-over-year increase. This contributed to management forecasting 2024 revenue of $2.125 billion and diluted EPS of $5.00 to $5.30 -- better than the consensus estimate among analysts that the company will report EPS of $4.99.
Hold off on looking to build a stronger portfolio with Sterling for now
Since Sterling's stock has soared this week, shares are now valued at 26 times trailing earnings, a rich valuation, considering its five-year average price-to-earnings ratio of 11.7. With expectations that the company will enjoy further success seemingly priced into the stock price, those considering Sterling's stock may want to wait for a pull back before starting a position.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
