Latest news with #E-Infrastructure
Yahoo
23-06-2025
- Business
- Yahoo
Sterling vs. Comfort Systems: Which Stock Wins on Data Center Growth?
Sterling Infrastructure Inc. STRL and Comfort Systems USA Inc. FIX are two infrastructure players well-positioned to benefit from the booming demand tied to data center development. Both companies are capitalizing on the rapid expansion of artificial intelligence (AI)-driven infrastructure needs, particularly the surge in large-scale data centers that power cloud computing and artificial intelligence specializes in advanced, large-scale site development services for data centers, manufacturing, distribution hubs, warehousing and power generation facilities. Meanwhile, Comfort Systems focuses on the complex mechanical, electrical and cooling systems that are essential for keeping these mission-critical facilities running efficiently. With the data center construction cycle accelerating, both companies are increasingly pursuing growth opportunities in this tariff-related cost pressures and potential volatility in hyperscaler capital expenditure pose risks to both businesses. Rising construction costs or shifts in economic policy may hurt customer investment plans, impacting project pipelines and profit margins. Navigating these uncertainties will be key as both companies pursue growth in the data center us dive deep and closely compare the fundamentals of the two stocks to determine which is a better investment now. This Texas-based provider of e-infrastructure solutions, building solutions and transportation solutions is steadily growing its E-Infrastructure platform, supported by strong project execution, disciplined bidding and deep customer relationships. Sterling's ability to deliver complex, mission-critical projects efficiently has made it a go-to partner for large-scale data center the first quarter of 2025, Sterling's E-Infrastructure Solutions revenues rose 18% year over year, with adjusted operating income surging 61% and margins expanding more than 600 basis points to 23%. A key growth driver is the company's deepening involvement in AI-driven data centers, which now make up above 65% of its E-Infrastructure E-Infrastructure projects having increasing strategic focus, sustained data center demand appears to be a key driver supporting the company's margin strength. At the end of the first quarter, the company's total backlog was $2.1 billion. The gross margin of the backlog reached 17.7%, up 100 basis points (bps) from 16.7% at the end of 2024. The improvement was driven by a higher E-Infrastructure backlog and its margin growth, with E-Infrastructure Solutions accounting for approximately 57% of the total backlog. This strong position is expected to support Sterling's growth trajectory through 2025 and June 17, 2025, Sterling strengthened its E-Infrastructure platform by announcing the acquisition of CEC Facilities Group, a specialty electrical and mechanical contractor focused on data centers, semiconductor facilities and advanced manufacturing. The acquisition is set to significantly enhance Sterling's service capabilities across the project lifecycle, providing access to maintenance and upgrade opportunities in addition to new construction. The addition of CEC broadens Sterling's customer base and geographic reach, particularly in Texas — a key market for data center and semiconductor expansion. (Read more: Sterling Expands E-Infrastructure Platform With CEC Buyout, Stock Up)Sterling expects mid-to-high teens revenue growth for its E-Infrastructure segment in 2025, with margins in the mid-20% range. The company's visibility into multi-year projects, supported by structural trends in AI, e-commerce and onshoring, suggests that it is well-positioned to benefit from continued investment in digital infrastructure. Management remains focused on pursuing high-return opportunities and leveraging its expanded platform to support sustained growth through 2026 and beyond. Comfort Systems is experiencing sustained growth in demand tied to data center development, supported by strong project bookings, expanding customer relationships and deepening technology capabilities. The company's specialized expertise in delivering complex mechanical and electrical systems positions it as a trusted partner for mission-critical infrastructure in the technology the first quarter of 2025, Comfort Systems reported record earnings per share of $4.75, surging more than 75% year over year, with revenues climbing 19% to $1.83 billion. This growth was largely driven by advanced technology projects, including data centers and semiconductor facilities, which now account for 37% of Comfort Systems' total revenues, up from 30% a year ago. The company's disciplined project management, operational efficiency and customer-centric execution continue to support its strong financial of March 31, 2025, the company's backlog reached a record $6.9 billion, with the same-store backlog increasing both sequentially and year over year. Management emphasized sustained demand from technology and industrial sectors, with large, complex projects continuing to strengthen the growth pipeline. Comfort Systems' consistent execution of demanding technology-driven assignments solidifies its competitive position in the fast-growing data center infrastructure company is also investing in modular construction capacity, an initiative that is expected to enhance execution speed and scalability — key requirements for today's rapidly expanding data center market. Management remains optimistic about continued growth, supported by a strong technology pipeline, record backlog and persistent demand for complex infrastructure projects. Comfort Systems expects stable performance through 2025 and sees positive momentum carrying into 2026, particularly as onshoring trends and AI-driven infrastructure investment continue to grow. Sterling's stock has gained 29.4% in the year-to-date period, outperforming the broader Construction sector's 4.3% fall. Meanwhile, Comfort Systems shares have risen 17.9% in the same time. Image Source: Zacks Investment Research Considering valuation, Sterling is trading below Comfort Systems on a forward 12-month price-to-earnings (P/E) ratio basis. Image Source: Zacks Investment Research The 2025 EPS estimates have trended upward over the past 30 days for FIX stock, while the same has been unchanged for STRL. The Zacks Consensus Estimate for STRL's 2025 bottom line suggests a 41.2% improvement, while that for FIX indicates a year-over-year increase of 32.1%. Image Source: Zacks Investment Research Image Source: Zacks Investment Research The strong demand for data center infrastructure, artificial intelligence and semiconductor projects is creating growth opportunities for Sterling and Comfort Systems. Both companies are well-positioned to benefit from the multi-year investment cycle reshaping the infrastructure Systems appears better positioned in the near term, supported by its record backlog, expanding technology exposure and faster project delivery capabilities. Sterling offers a solid long-term growth story, driven by its expanding E-Infrastructure platform and the strategic acquisition of CEC Facilities weighing both options, Comfort Systems — a Zacks Rank #1 (Strong Buy) company — currently stands out as the better investment for 2025, backed by operational strength, earnings momentum and a well-diversified growth pipeline. Sterling — a Zacks Rank #2 (Buy) company — presents a solid long-term opportunity with an attractive valuation, but its near-term earnings visibility is not as strong as Comfort Systems at this stage, which is depicted by the muted earnings estimate revision can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
19-06-2025
- Business
- Yahoo
Sterling Expands E-Infrastructure Platform With CEC Buyout, Stock Up
Sterling Infrastructure, Inc. STRL has signed a definitive agreement to acquire CEC Facilities Group, LLC, a specialty electrical and mechanical contractor based in Irving, TX. The deal is valued at $505 million, including $450 million in cash and $55 million in Sterling Common transaction is expected to close in the third quarter of 2025, after which CEC will join the company's E-Infrastructure Solutions segment. The agreement also includes an earn-out if CEC meets certain operating income targets through Dec. 31, of this Texas-based E-Infrastructure Solutions, Building Solutions and Transportation Solutions provider gained 5.6% during yesterday's trading session and 1.2% in after-hours trading. Sterling is set to expand its E-Infrastructure capabilities through this strategic acquisition. CEC is a non-union electrical contractor with operations focused on fast-growing markets such as data centers, semiconductors and manufacturing. A majority of CEC's revenues and backlog are linked to these mission-critical sectors. The company provides end-to-end services including design, engineering, installation and maintenance for complex electrical acquisition will allow Sterling to strengthen its position across the full project lifecycle, including ongoing maintenance and upgrade work. CEC's services align well with Sterling's existing E-Infrastructure platform. The combined business is expected to benefit from cross-selling opportunities and a broader customer base. Sterling has an established presence in the data center segment, while CEC brings strength in the semiconductor market, along with coverage across Texas and other key addition of CEC also supports Sterling's financial profile. CEC has a strong growth record, with an estimated revenue CAGR of around 20% and an EBITDA margin of approximately 13% in 2025. The deal is expected to be accretive to Sterling's return on invested capital (ROIC). The company also sees scope to expand the electrical services platform further through organic growth and targeted M&A, supported by favorable market trends across CEC's core sectors. In 2025, CEC is projected to generate $390-$415 million in revenues and $51 million to $54 million in EBITDA. Estimated adjusted EPS accretion for Sterling is between 63 cents and 70 cents per diluted share. The proportion of revenue and earnings contribution from CEC to Sterling will depend on the deal's closing date. Based on current expectations, the acquisition is likely to contribute around five months of financial results in 2025. Image Source: Zacks Investment Research Shares of Sterling have gained 87.5% over the past three months, outperforming 25.5% growth in the Zacks Engineering - R and D Services industry. The company is benefiting from the E-Infrastructure segment's stability, strong backlog, inorganic growth efforts and steady bid activity in key transportation markets. Sterling currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks from the Construction sector are AECOM ACM, EMCOR Group, Inc. EME and Gibraltar Industries, Inc. presently has a Zacks Rank #2. You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks company delivered a trailing four-quarter earnings surprise of 8.9%, on average. The stock has increased 26.8% in the past year. The Zacks Consensus Estimate for AECOM's fiscal 2025 sales and EPS implies an increase of 13.9% and 5.6%, respectively, from a year currently holds a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 22.8%, on average. The stock has increased 24.8% in the past consensus estimate for EMCOR's 2025 sales and EPS implies an increase of 12.7% and 9.6%, respectively, from a year currently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 3.1%, on average. The stock has lost 18.8% in the past Zacks Consensus Estimate for Gibraltar's 2025 sales and EPS implies an increase of 9.3% and 15.8%, respectively, from a year ago. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AECOM (ACM) : Free Stock Analysis Report EMCOR Group, Inc. (EME) : Free Stock Analysis Report Gibraltar Industries, Inc. (ROCK) : Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
