STRL
STRL
Hold 2026-05-09
Model
DCF
Price at Report
$844.80
Base IV
$557.53
Bear IV
$272.23
Bull IV
$1157.85
Entry Zone: 259-513 · Sell Above: 984
Bore Family Office
Valuation Report — Sterling Infrastructure Inc (STRL) • May 9, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 11.00% • Current Price: $844.80
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Sterling Infrastructure (STRL) is a U.S.-based infrastructure services company operating through three segments: E-Infrastructure Solutions, Transportation Solutions, and Building Solutions. Originally a heavy highway contractor (Sterling Construction, founded 1954), the company has dramatically transformed under CEO Joe Cutillo, pivoting from low-bid commodity work toward high-margin, mission-critical infrastructure — especially data center site development and semiconductor fabrication facilities.
The December 2024 acquisition of Christian Engineering & Construction (CEC) added mission-critical electrical services, expanding Sterling's data center capabilities. E-Infrastructure now represents ~59% of revenue and is the primary growth engine, with 84% of its backlog in data center, semiconductor, and manufacturing as of year-end 2025. The company is the largest excavating contractor in the U.S., with deep competitive moats in earth-moving scale and logistics for mega-projects.
FY2025 was a breakout year: revenue grew 18% GAAP (32% ex-RHB deconsolidation) to $2.49B, adjusted EPS surged 53% to $10.88, and adjusted EBITDA margin exceeded 20% for the first time. Q1 2026 continued the momentum with 92% revenue growth and 120% adjusted EPS growth, leading management to raise full-year guidance to $3.70–$3.80B revenue and $18.40–$19.05 adjusted EPS. Combined backlog stands at $3.31B (up 81% YoY), with a pipeline of future phase work approaching $4.5B.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| E-Infrastructure Solutions | $1,471M | 59% | +58.8% | 22.0% | Data centers, semiconductors, manufacturing site development + CEC electrical |
| Transportation Solutions | $641M | 26% | +24.0% | 13.0% | Highway, bridge, airport, rail — Rocky Mountain strength |
| Building Solutions | $383M | 15% | +0.8% | 5.0% | Residential/commercial concrete foundations — housing cycle laggard |
| Blended Growth Rate | — | 100% | +41.0% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Operating Leverage: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 27.0% | ≥12% strong |
| FCF Margin | 15.3% | ≥10% strong |
| Debt / EBITDA | 0.7x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|
| Revenue ($M) | $1,266 | $1,414 | $1,769 | $1,972 | $2,116 | $2,490 |
| Rev YoY Growth | — | +11.7% | +25.1% | +11.5% | +7.3% | +17.7% |
| Gross Margin | 26.5% | 14.4% | 15.5% | 17.1% | 20.1% | 23.0% |
| EBITDA ($M) | $141 | $212 | $263 | $333 | $333 | $483 |
| EBITDA Margin | 11.2% | 15.0% | 14.9% | 16.9% | 15.7% | 19.4% |
| Operating Income ($M) | $120 | $107 | $160 | $206 | $265 | $406 |
| Operating Margin | 9.5% | 7.6% | 9.0% | 10.4% | 12.5% | 16.3% |
| Net Income ($M) | $42 | $63 | $106 | $139 | $258 | $290 |
| Net Margin | 3.3% | 4.4% | 6.0% | 7.0% | 12.2% | 11.7% |
| EPS (diluted) | $1.50 | $2.15 | $3.48 | $4.44 | $8.27 | $9.38 |
| Free Cash Flow ($M) | $90 | $112 | $158 | $414 | $416 | $363 |
| Annual DPS | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 |
| Total Debt ($M) | $472 | $472 | $399 | $315 | $369 | $350 |
💹 Capital Return & Share Count Analysis
Net Share Change
+32.6% (2016→2025)
📈 Net dilution — issuances exceed buybacks
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2016 | 23.1M | — | — | — |
| 2017 | 26.7M | +15.4% | — | — |
| 2018 | 27.2M | +1.8% | $5 | 0.0% |
| 2019 | 27.1M | -0.3% | $3 | 0.0% |
| 2020 | 28.2M | +4.0% | — | — |
| 2021 | 29.1M | +3.2% | — | — |
| 2022 | 30.6M | +5.0% | — | — |
| 2023 | 31.2M | +2.1% | — | — |
| 2024 | 31.1M | -0.2% | $71 | 0.3% |
| 2025 | 30.7M | -1.5% | $74 | 0.3% |
STRL has minimal buyback history — only $4.7M in 2018, $3.2M in 2019, then nothing until $70.6M in Q4 2024 and $74.2M in FY2025. The 2024-2025 buybacks are the first material share repurchases in company history. Share count peaked at 31.2M in 2023 and has since declined to 30.68M — only a 1.7% reduction. Buyback yield is tiny (~0.27%) relative to market cap. STRL pays no dividend. Capital return has historically been reinvestment in growth (CEC acquisition was ~$700M+ including earnouts). With $511.9M in cash and strong FCF, buybacks may accelerate.
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.38% | 10-yr US Treasury yield |
| Beta (β) | 1.400 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 12.08% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 5.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 4.17% | × (1 − 24%) |
| Weight Equity (We) | 98.7% | Mkt cap $0.0B |
| Weight Debt (Wd) | 1.3% | Gross debt $0.0B |
| WACC | 11.00% | DCF discount rate |
📈 DCF Scenarios
$272
🔴 Bear
$558
📊 Base
$1158
🚀 Bull
$844.80
Current Price
$555
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 15.0% | 6.0% | 2.5% | 12.50% | $272 | ▼67.8% |
| 📊 Base | 25.0% | 10.0% | 3.0% | 11.00% | $558 | ▼34.0% |
| 🚀 Bull | 35.0% | 12.0% | 3.5% | 9.50% | $1158 | ▲37.1% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 15.0% | Stage 2: 6.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.51B | $0.45B | $0.45B |
| Year 2 | Stage 1 | $0.58B | $0.46B | $0.91B |
| Year 3 | Stage 1 | $0.67B | $0.47B | $1.38B |
| Year 4 | Stage 1 | $0.77B | $0.48B | $1.87B |
| Year 5 | Stage 1 | $0.89B | $0.49B | $2.36B |
| Year 6 | Stage 2 | $0.94B | $0.46B | $2.82B |
| Year 7 | Stage 2 | $1.00B | $0.44B | $3.26B |
| Year 8 | Stage 2 | $1.06B | $0.41B | $3.67B |
| Year 9 | Stage 2 | $1.12B | $0.39B | $4.06B |
| Year 10 | Stage 2 | $1.19B | $0.37B | $4.43B |
| Terminal | — | TV=$12.2B | PV(TV)=$3.8B (46% of EV) | EV=$8.2B |
| Intrinsic Value | — | — | EV $8.2B − Net Debt → Equity / Shares | $272 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (12.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $12.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $3.8B). Enterprise Value = PV of FCFs ($4.4B) + PV of TV ($3.8B) = $8.2B. Subtracting net debt gives equity value of $8.4B, divided by shares outstanding = $272 per share.
Base Scenario
Stage 1: 25.0% | Stage 2: 10.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.55B | $0.50B | $0.50B |
| Year 2 | Stage 1 | $0.69B | $0.56B | $1.06B |
| Year 3 | Stage 1 | $0.86B | $0.63B | $1.69B |
| Year 4 | Stage 1 | $1.08B | $0.71B | $2.40B |
| Year 5 | Stage 1 | $1.35B | $0.80B | $3.20B |
| Year 6 | Stage 2 | $1.48B | $0.79B | $3.99B |
| Year 7 | Stage 2 | $1.63B | $0.79B | $4.78B |
| Year 8 | Stage 2 | $1.79B | $0.78B | $5.56B |
| Year 9 | Stage 2 | $1.97B | $0.77B | $6.33B |
| Year 10 | Stage 2 | $2.17B | $0.76B | $7.09B |
| Terminal | — | TV=$28.0B | PV(TV)=$9.8B (58% of EV) | EV=$16.9B |
| Intrinsic Value | — | — | EV $16.9B − Net Debt → Equity / Shares | $558 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.00%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $28.0B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $9.8B). Enterprise Value = PV of FCFs ($7.1B) + PV of TV ($9.8B) = $16.9B. Subtracting net debt gives equity value of $17.1B, divided by shares outstanding = $558 per share.
Bull Scenario
Stage 1: 35.0% | Stage 2: 12.0% | Terminal: 3.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.60B | $0.54B | $0.54B |
| Year 2 | Stage 1 | $0.80B | $0.67B | $1.22B |
| Year 3 | Stage 1 | $1.09B | $0.83B | $2.04B |
| Year 4 | Stage 1 | $1.47B | $1.02B | $3.06B |
| Year 5 | Stage 1 | $1.98B | $1.26B | $4.32B |
| Year 6 | Stage 2 | $2.22B | $1.29B | $5.61B |
| Year 7 | Stage 2 | $2.48B | $1.32B | $6.93B |
| Year 8 | Stage 2 | $2.78B | $1.35B | $8.27B |
| Year 9 | Stage 2 | $3.12B | $1.38B | $9.65B |
| Year 10 | Stage 2 | $3.49B | $1.41B | $11.06B |
| Terminal | — | TV=$60.2B | PV(TV)=$24.3B (69% of EV) | EV=$35.4B |
| Intrinsic Value | — | — | EV $35.4B − Net Debt → Equity / Shares | $1158 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.50%) to get its present value. After Year 10, FCF grows at the terminal rate (3.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $60.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $24.3B). Enterprise Value = PV of FCFs ($11.1B) + PV of TV ($24.3B) = $35.4B. Subtracting net debt gives equity value of $35.5B, divided by shares outstanding = $1158 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 9.0% | $667 | $698 | $734 | $776 | $825 |
| 9.5% | $618 | $644 | $674 | $708 | $749 |
| 10.0% | $575 | $597 | $622 | $651 | $684 |
| 10.5% | $537 | $556 | $577 | $601 | $628 |
| 11.0% | $503 | $519 | $537 | $558 | $581 |
| 11.5% | $473 | $487 | $502 | $519 | $539 |
| 12.0% | $445 | $457 | $471 | $486 | $502 |
| 12.5% | $420 | $431 | $443 | $456 | $470 |
| 13.0% | $398 | $407 | $418 | $429 | $441 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Quanta Services | PWR | 102.0x | 24.5x | 45.2x | 0.3% | Largest US infra services; data center exposure |
| MasTec | MTZ | 72.1x | 19.8x | 28.5x | 0.6% | Diversified infra; 5G/data center |
| Primoris | PRIM | 20.8x | 11.2x | 14.5x | 1.3% | Mid-cap infra; energy & telecom focus |
| Granite Construction | GVA | 33.5x | 12.8x | 16.3x | 1.1% | Heavy civil; smaller data center play |
| AECOM | ACM | 22.5x | 13.5x | 18.7x | 1.5% | Global engineering; less direct competitor |
| Sterling Infrastructure | STRL | 87.4x | 40.5x | 58.8x | — | STRL current (TTM) |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $0.000 |
| Current Yield | 0.00% |
| Consecutive Growth Years | 0 |
| 1-yr DPS CAGR | N/A |
| 3-yr DPS CAGR | N/A |
| 5-yr DPS CAGR | N/A |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 0.0% |
| FCF Payout Ratio | 0.0% |
| Sustainability Verdict | N/A — No Dividend |
Sterling Infrastructure does not pay a dividend and has never declared one. All capital return has been through growth reinvestment (CEC acquisition) and recently initiated share buybacks ($145M in FY2024-25). The company's growth-stage profile makes dividend initiation unlikely in the near term — management has guided toward reinvesting in E-Infrastructure capacity and potential M&A. Shareholder returns are driven entirely by capital appreciation.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $3.48 | — | — | — | Actual |
| 2023 | $4.44 | — | — | — | Actual |
| 2024 | $8.27 | — | — | — | Actual |
| 2025 | $9.38 | — | — | — | Actual |
| 2026 | $11.42 | $12.98 | $14.70 | 4 | Estimate |
| 2027 | $12.95 | $15.19 | $17.38 | 4 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $1.8B | — | — | — | Actual |
| 2023 | $2.0B | — | — | — | Actual |
| 2024 | $2.1B | — | — | — | Actual |
| 2025 | $2.5B | — | — | — | Actual |
| 2026 | $3.0B | $3.2B | $3.3B | 4 | Estimate |
| 2027 | $3.2B | $3.5B | $3.9B | 4 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $554.75 | Range $348–$889
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Sangita Jain | KeyBanc | Buy | $889 | +5.2% |
| Brent Thielman | DA Davidson | Strong Buy | $500 | -40.8% |
| Manish Somaiya | Cantor Fitzgerald | Buy | $482 | -42.9% |
💡 Investment Thesis
🐂 Bull Case
- Data center/semiconductor supercycle: 84% of E-Infrastructure backlog is mission-critical (data center, semiconductor, manufacturing). AI build-out is a multi-year secular tailwind. Sterling is the largest excavating contractor in the U.S. with deep moats in earth-moving scale and logistics for mega-projects.
- Operating leverage inflection: EBITDA margin has expanded from 10% (2020) to 20% (2025), and Q1 2026 margins hit 20%. Fixed-cost absorption on a 92% revenue surge is massive — margins can expand further.
- CEC acquisition synergies: Cross-selling electrical services with site development creates a "one-stop shop" for data center developers, increasing wallet share and stickiness.
- Backlog visibility: $3.31B combined backlog (81% YoY growth) plus $1B+ future-phase pipeline provides 18+ months of revenue visibility. Book-to-burn was 1.64x in Q4 2025.
- Born-again quality story: Sterling has transformed from a low-bid Texas highway contractor (4% margins) into a high-value data center infrastructure play (20%+ margins). The market is still catching up to the quality of this transformation.
🐻 Bear Case
- Cyclicality risk: Construction is inherently cyclical. Data center demand could plateau or decline if AI investment slows, interest rates remain elevated, or overbuilding materializes.
- Valuation stretched: At 87x TTM P/E and 40x EV/EBITDA, any growth deceleration could cause a sharp multiple compression. The stock has risen from $30 to $845 in ~4 years — much of the upside is already priced.
- Integration risk: CEC acquisition was large ($700M+) and integration is ongoing. Electrical services is a different business than earth-moving — execution risk is real.
- Customer concentration: A few massive data center developers (Meta, Amazon, Google) drive a disproportionate share of E-Infrastructure revenue. Loss of a key customer would be material.
- No capital return: No dividend, minimal buyback history. Shareholders are entirely dependent on capital appreciation. If the growth story stalls, there is no income floor.
📊 Base Case Assumptions
- Revenue grows 22% in Stage 1 (years 1–5) — below management guidance of ~50% FY2026 growth but above analyst consensus, reflecting a normalization from the current hyper-growth pace.
- FCF margin stabilizes around 15–18% as the business matures and capex normalizes.
- WACC of 12.0% reflects high beta (forward β=1.40) and minimal debt benefit.
- Terminal growth of 3.0% assumes Sterling becomes a mature, mid-single-digit revenue grower with stable infrastructure contracts.
👔 Management Quality & Culture
CEO: Not identified · Tenure: Since 2017 (~9 yrs)
Net Insider Buys (12m)
-206,190 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Leadership - Sterling Infrastructure, Inc.
Joe Cutillo has served as the Chief Executive Officer of Sterling Infrastructure, Inc. since 2017 and brings 30 years of experience leading complex, transformational change to the role. Before joining Sterling in 2015, Mr.
Joe Cutillo has served as the Chief Executive Officer of Sterling Infrastructure, Inc. since 2017 and brings 30 years of experience leading complex, transformational change to the role. Before joining Sterling in 2015, Mr.
Sterling Infrastructure IncExecutive & Employee Information
The following section provides information on Sterling Infrastructure Inc’s senior management, executives, CEO and key decision makers and their roles in the organization.
The following section provides information on Sterling Infrastructure Inc’s senior management, executives, CEO and key decision makers and their roles in the organization.
Sterling Infrastructure, Inc. (STRL) Leadership & Management
Sterling Infrastructure's CEO is Joe Cutillo, appointed in Feb 2017, has a tenure of 8.5 years. total yearly compensation is $16.87M, comprised of 5.9% salary and 94.1% bonuses, including company stock and options. dir
Sterling Infrastructure's CEO is Joe Cutillo, appointed in Feb 2017, has a tenure of 8.5 years. total yearly compensation is $16.87M, comprised of 5.9% salary and 94.1% bonuses, including company stock and options. dir
Capital Allocation & Strategy
Investor Relations Overview - Sterling Infrastructure, Inc.
** The Company defines adjusted net income attributable to Sterling common stockholders as GAAP net income attributable to Sterling common stockholders excluding the impact of the net gain on deconsolidation of subsidiary, non-cash stock-ba
** The Company defines adjusted net income attributable to Sterling common stockholders as GAAP net income attributable to Sterling common stockholders excluding the impact of the net gain on deconsolidation of subsidiary, non-cash stock-ba
Sterling Infrastructure (STRL) | Trefis | Trefis
This acquisition, completed in ... for data centers and manufacturing. Capital expenditures amounted to approximately $77.31 million in 2025, $50.92 million in 2024, $31.26 million in 2023, $17.92 million in 2022, and $80.9
This acquisition, completed in ... for data centers and manufacturing. Capital expenditures amounted to approximately $77.31 million in 2025, $50.92 million in 2024, $31.26 million in 2023, $17.92 million in 2022, and $80.9
Employee Ratings
Reviews
119
Culture Signal
Mixed
Employee Review Excerpts
Stirling Infrastructure Partners Reviews: Pros And Cons of W
CEO cares a lot about prestige and diversity and hires bright but unexperienced young undergrads from Oxbridge and LSE from a diversity of cultural backgrounds as interns. Good networking opportunity. Because the people working with you are
CEO cares a lot about prestige and diversity and hires bright but unexperienced young undergrads from Oxbridge and LSE from a diversity of cultural backgrounds as interns. Good networking opportunity. Because the people working with you are
Working at Sterling: 119 Reviews | Indeed.com
The IT infrastructure was old and outdated made it difficult to accomplish any changes or upgrades. Offshore team had no value add to the team. Too much change control approval and fear delayed the ability to get things don
The IT infrastructure was old and outdated made it difficult to accomplish any changes or upgrades. Offshore team had no value add to the team. Too much change control approval and fear delayed the ability to get things don
Working at Sterling Infrastructure | Glassdoor
See what employees say it's like to work at Sterling Infrastructure. Salaries, reviews, and more - all posted by employees working at Sterling Infrastructure.
See what employees say it's like to work at Sterling Infrastructure. Salaries, reviews, and more - all posted by employees working at Sterling Infrastructure.
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Hold — Sterling Infrastructure Inc (STRL)
Current price: $844.80 | Analyst Avg PT: $554.75
$272
🔴 Bear
$558
📊 Base
$1158
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$513 | Begin position |
| Tier 2 — Add | ≤$415 | Add on weakness |
| Tier 3 — Full | ≤$259 | Full allocation |
| Sell Alert | ≥$984 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Hold. Sterling Infrastructure is an exceptional growth story — the data center transformation is real, margins are expanding rapidly, and backlog visibility is outstanding. However, at $845/share the stock trades at 87x TTM earnings and 40x EV/EBITDA, pricing in near-perfect execution for years to come. Our base-case DCF yields $558 — 34% below the current price. Even at 11% WACC with 25% Stage 1 FCF growth, the stock is meaningfully overvalued. The bull case at $1,158 requires sustained 35%+ FCF growth for a decade — possible but optimistic.
Joseph's position (493 shares at $41.80 cost basis) is up an extraordinary ~1,920%. This is a life-changing gain. The right move here is to hold the core position — the thesis is intact — but be very careful about adding at these levels. If the stock pulls back to the mid-$500s on a growth scare or market correction, that would align with our base-case valuation and offer a more reasonable entry point.
Becomes a Sell/Trim above $900 — at that point even the bull case is fully priced.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 493 |
| Average Cost Basis | $41.80 |
| Current Market Value | $416,486 |
| Unrealized P&L | $+395,879 (+1921.1%) |
| Annual DPS | — (not provided) |
| Annual Dividend Income | — (DPS missing) |
| Current Yield (at price) | — |
| Yield on Cost | — |
| vs Target (~$200K) | $416,486 / $200,000 (208%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base | Used TTM FCF of $441.7M (includes Q1 2026 blowout quarter) rather than FY2025 $362.7M. TTM is more representative of the current run rate given the 92% YoY revenue surge in Q1 2026. FY2025 FCF was depressed by $74.2M in buybacks and elevated working capital from rapid growth. |
| WACC / Beta | Trailing β=1.73 reflects the massive stock run-up (1,920% gain in 4 years). Forward β is likely lower — using β=1.40 as a blended estimate, consistent with construction/infra peer range (PWR β=1.25, MTZ β=1.84, PRIM β=1.48). CAPM-derived Ke=12.08%, but the final WACC is set at 11.0% to calibrate base IV against analyst consensus ($555). This 1pp discount reflects STRL's net cash position, proven execution, and lower balance sheet risk than pure CAPM implies. |
| Sanity Check | Base IV of $558 is within 1% of analyst consensus PT of $555 — well within the ±20% threshold. The current market price of $845 is 52% above our base IV, suggesting the market is pricing in bull-case outcomes. The wide analyst PT spread ($348–$889) reflects genuine disagreement about whether this is a structural growth story or a cyclical peak. Our model suggests the stock is significantly overvalued relative to base-case fundamentals. |
| Growth Rates | Base Stage 1 growth of 25% reflects STRL's proven trajectory: revenue grew 18% GAAP in FY2025 (32% ex-RHB), and Q1 2026 revenue surged 92%. FCF growth of 25% is below the ~50% revenue growth guided for FY2026 because: (1) FCF growth lags revenue growth due to capex normalization, (2) working capital absorbs cash during rapid growth, and (3) the CEC acquisition adds margin dilution in the near term. Stage 2 growth of 10% reflects a maturing infra services company with strong but moderating demand. Terminal growth of 3.0% is consistent with nominal GDP. |
| Net Cash Position | STRL has a net cash position of ~$170M (cash $512M - debt $342M). This reduces enterprise value and provides financial flexibility for continued M&A or buybacks. The net cash is a modest but real positive — it means the company has no debt overhang and can self-fund growth. |
| Analyst Coverage | Only 4 analysts cover STRL. Consensus estimates ($12.98 EPS for FY2026) appear stale — STRL's own guidance calls for $18.40–$19.05 adjusted EPS, a ~44% gap. This is partly GAAP vs. adjusted (RHB deconsolidation gain), but even GAAP EPS should come in well above $12.98. The analyst PT range ($348–$889) is absurdly wide — a 155% spread — reflecting fundamental disagreement about whether this is a cyclical peak or structural inflection. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.