Original source text
Key Takeaways STRL is the better buy, backed by stronger growth, backlog momentum and estimate revisions.Mission-critical projects make up more than 90% of Sterling's E-Infrastructure backlog.Granite offers a lower valuation and record $7.2B CAP, but its growth outlook is less aggressive. Infrastructure spending remains a major growth driver for U.S. construction companies, supported by data center development, semiconductor manufacturing, transportation upgrades and federal infrastructure programs. Contractors with strong project pipelines, specialized capabilities and disciplined execution are particularly well positioned. Sterling Infrastructure (STRL - Free Report) and Granite Construction (GVA - Free Report) both benefit from these trends, but their business profiles differ.
Sterling has shifted toward high-growth mission-critical infrastructure, while Granite remains a diversified civil contractor and construction materials producer with significant exposure to public infrastructure.
Let's dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for Sterling StockSterling has transformed itself into a high-growth infrastructure platform focused on data centers, semiconductor fabrication, advanced manufacturing and mission-critical electrical work. First-quarter 2026 revenues surged 92% year over year, while adjusted earnings per share (EPS) climbed 120%. Adjusted EBITDA more than doubled, and margins expanded despite the integration of the recently acquired CEC business.
The E-Infrastructure Solutions segment remains Sterling’s primary growth engine. Segment revenues increased 174%, supported by strong organic growth and CEC’s contribution. Mission-critical projects accounted for more than 90% of E-Infrastructure backlog, highlighting Sterling’s growing exposure to large data center, manufacturing and semiconductor investments. The company is also gaining traction from cross-selling site development and electrical services, which should help increase project scope, improve execution and support margins.
Sterling’s backlog provides strong multiyear visibility. Signed backlog reached $3.8 billion, while the combined backlog increased to $5.15 billion. Including unsigned awards and high-probability future phases, management sees an opportunity pool approaching $6.5 billion. The first phase of a large semiconductor fabrication campus further strengthens its long-term growth potential, with additional project phases expected over several years.
The Stone Ridge acquisition adds another growth avenue. The deal expands Sterling’s site development capabilities across the Pacific Northwest and Texas and increases its exposure to data centers, mining and industrial infrastructure. Stone Ridge is expected to generate between $180 million and $200 million in full-year revenues with mid-teen EBITDA margins.
Sterling’s main risk is its premium valuation. The stock’s strong rally has raised expectations, meaning any slowdown in project awards, execution or data center spending could pressure its multiple. Building Solutions also remains exposed to weak residential affordability, while rapid expansion and acquisition integration add operational risks.
Nevertheless, Sterling’s growth, backlog visibility, margins and mission-critical market exposure provide a powerful investment case.
The Case for Granite StockGranite offers a more diversified and value-oriented construction investment. The company operates across transportation, federal infrastructure, private construction and construction materials, reducing its dependence on any single end market.
First-quarter revenues increased 30% year over year to $912 million, while adjusted EBITDA more than doubled. Construction segment revenues rose nearly 25%, supported by strong organic growth and acquired businesses. Granite also ended the quarter with record committed and awarded projects, or CAP, of $7.2 billion, an increase of $1.4 billion from the prior year.
Granite’s vertically integrated model is a key strength. Its materials operations supply aggregates and asphalt, supporting construction projects while providing exposure to pricing and volume growth. Materials revenues increased sharply in the first quarter, while gross profit and cash gross profit margins improved significantly. Recent acquisitions, including Warren Paving, Papich Construction and Kenny Seng Construction, have expanded Granite’s geographic presence and materials capabilities.
Granite is also expanding into attractive markets. Federal CAP reached $1.3 billion, including tactical infrastructure work, while management sees growing opportunities in rail facilities and mission-critical data center site development. The Kenny Seng acquisition strengthens Granite’s Utah platform and adds exposure to education, civil infrastructure and private-sector projects.
Following the strong quarter and recent project awards, Granite raised its 2026 revenue guidance between $5.2 billion and $5.4 billion and increased its adjusted EBITDA margin outlook. Improved project execution, SG&A leverage and materials performance should support earnings growth.
However, Granite’s growth outlook is less aggressive than Sterling’s. Traditional civil projects can be affected by weather, funding availability and execution delays. The company also reported a GAAP net loss in the first quarter, while higher interest costs and acquisition-related debt remain considerations.
Sterling Leads the Share Price RaceSterling shares have surged 108.5% year to date, substantially outperforming Granite’s 7.5% gain. Sterling has also outpaced the Zacks Construction sector’s 7.3% advance and the S&P 500’s 8.8% return.
STRL vs GVA Price Performance (YTD)
Image Source: Zacks Investment Research
Among peers, Comfort Systems USA (FIX - Free Report) and EMCOR Group (EME - Free Report) have also benefited from rising investments in AI data centers, electrical infrastructure and mission-critical construction. However, Sterling’s stock performance indicates particularly strong investor confidence in its earnings growth, expanding backlog and strategic positioning.
Granite’s performance is close to the broader construction sector, reflecting its steadier operating profile and more moderate earnings outlook.
Granite Offers Value, but Sterling’s Premium Is JustifiedSterling trades at 27.99X forward 12-month earnings, above Granite’s 15.8X and the Zacks Construction sector average of 20.49X.
STRL vs GVA Valuation (P/E F12M)
Image Source: Zacks Investment Research
The premium is more reasonable when compared with mission-critical infrastructure peers. FIX trades at 34.51X forward earnings, meaning Sterling remains less expensive despite its rapid growth in data center and advanced manufacturing projects. EME stock also commands a higher valuation than traditional civil contractors at 23.75X because of its exposure to electrical, mechanical and mission-critical construction markets.
Granite is clearly the cheaper stock and may appeal to value-focused investors. However, its discount reflects a slower growth profile, lower margins and greater exposure to conventional public infrastructure projects. Sterling’s premium is supported by stronger earnings growth and superior backlog momentum.
Sterling Has the Stronger Estimate TrendOver the past 60 days, the Zacks Consensus Estimate for Sterling’s 2026 EPS has increased to $19.12, while the 2027 estimate has risen to $25.83. Earnings are expected to grow 75.7% in 2026 on revenue growth of 59.2%. For 2027, EPS and revenues are projected to increase 35.1% and 29.1%, respectively.
STRL EPS Estimate Revision Trend
Image Source: Zacks Investment Research
Granite’s consensus estimate has remained unchanged over the past 30 days at $6.92 for 2026 and $8.61 for 2027. Its 2026 EPS is expected to increase 14%, accompanied by revenue growth of 20.2%. For 2027, EPS is projected to grow 24.4% on an 11.1% revenue increase.
GVA’s EPS Estimate Revision Trend
Image Source: Zacks Investment Research
Sterling, therefore, holds a clear advantage in both expected growth and positive estimate revisions.
Which Stock Is the Better Buy?Granite remains a solid infrastructure stock, supported by record CAP, a growing materials platform, strategic acquisitions and an attractive valuation. It appears suitable for investors seeking moderate growth at a lower earnings multiple.
Sterling, however, offers better upside potential. Its exposure to data centers, semiconductor facilities and mission-critical projects supports significantly stronger revenue and earnings growth. Rapidly expanding backlog, margin improvement, cross-selling opportunities and upward estimate revisions further strengthen the outlook.
Sterling’s Zacks Rank #1 (Strong Buy) also compares favorably with Granite’s Zacks Rank #3 (Hold). Despite its higher valuation, Sterling’s superior earnings momentum and secular growth exposure make it the better construction stock to buy now. You can see the complete list of today’s Zacks #1 Rank stocks here.
