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Factors Setting the Tone for Sterling's (STRL) Q3 Earnings
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Sterling Construction Company, Inc. (STRL - Free Report) is slated to report third-quarter 2021 results on Nov 2, after the closing bell.
In the last reported quarter, adjusted earnings surpassed the Zacks Consensus Estimate by 46.8% but revenues missed the same by 0.4%. On a year-over-year basis, earnings improved 6.2% driven by a diversified business and focus on higher-margin, lower-risk opportunities. Further, revenues were up 0.4% year over year.
This mechanical and electrical construction service provider’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and missed on one occasion, with the average surprise being 31.8%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at 56 cents per share over the past 30 days. The figure indicates a 1.8% increase from the year-ago earnings of 55 cents per share. The consensus mark for revenues is $405.4 million, suggesting a 5.7% improvement from the year-earlier reported figure.
Sterling Construction Company Inc Price and EPS Surprise
The company’s third-quarter revenues are likely to have benefited from a diversified portfolio and focus on higher-margin, lower-risk projects. Sterling has been shifting away from low-bid heavy highway projects to alternative delivery work. It has been efficiently executing a robust pipeline of projects for large high-profile customers who are building new distribution centers, data centers and warehouses.
The Heavy Civil business segment, contributing 50% to total revenues, is likely to have gained from the company’s focus on more alternative delivery work with higher margins and lower risks rather than low-bid heavy highway projects.
Its Residential segment, accounting for 12% of total revenues, is likely to have witnessed strong demand and productivity trends in the quarter to be reported. Yet, the segment has been experiencing supply-chain issues, specifically relating to the cost of concrete, lumber and steel, due to which, management announced multiple price increases during the quarter. These headwinds might put pressure on third-quarter results.
Its Specialty Services segment, accounting for 38% of total revenues, has been gaining strength from geographic expansion efforts that enabled the company to gain new customers.
Yet, inflation, supply chain pressures and weather-related challenges are likely to have reflected on third-quarter margins.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for Sterling this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat but that is not the case here as you will see below.
Earnings ESP: It has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sterling currently carries a Zacks Rank #2.
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +7.33% and a Zacks Rank #3.
Jacobs Engineering Group Inc. (J - Free Report) has an Earnings ESP of +6.49% and holds a Zacks Rank #2.
Installed Building Products, Inc. (IBP - Free Report) has an Earnings ESP of +0.60% and a Zacks Rank #3.
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Factors Setting the Tone for Sterling's (STRL) Q3 Earnings
Sterling Construction Company, Inc. (STRL - Free Report) is slated to report third-quarter 2021 results on Nov 2, after the closing bell.
In the last reported quarter, adjusted earnings surpassed the Zacks Consensus Estimate by 46.8% but revenues missed the same by 0.4%. On a year-over-year basis, earnings improved 6.2% driven by a diversified business and focus on higher-margin, lower-risk opportunities. Further, revenues were up 0.4% year over year.
This mechanical and electrical construction service provider’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and missed on one occasion, with the average surprise being 31.8%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at 56 cents per share over the past 30 days. The figure indicates a 1.8% increase from the year-ago earnings of 55 cents per share. The consensus mark for revenues is $405.4 million, suggesting a 5.7% improvement from the year-earlier reported figure.
Sterling Construction Company Inc Price and EPS Surprise
Sterling Construction Company Inc price-eps-surprise | Sterling Construction Company Inc Quote
Factors to Note
The company’s third-quarter revenues are likely to have benefited from a diversified portfolio and focus on higher-margin, lower-risk projects. Sterling has been shifting away from low-bid heavy highway projects to alternative delivery work. It has been efficiently executing a robust pipeline of projects for large high-profile customers who are building new distribution centers, data centers and warehouses.
The Heavy Civil business segment, contributing 50% to total revenues, is likely to have gained from the company’s focus on more alternative delivery work with higher margins and lower risks rather than low-bid heavy highway projects.
Its Residential segment, accounting for 12% of total revenues, is likely to have witnessed strong demand and productivity trends in the quarter to be reported. Yet, the segment has been experiencing supply-chain issues, specifically relating to the cost of concrete, lumber and steel, due to which, management announced multiple price increases during the quarter. These headwinds might put pressure on third-quarter results.
Its Specialty Services segment, accounting for 38% of total revenues, has been gaining strength from geographic expansion efforts that enabled the company to gain new customers.
Yet, inflation, supply chain pressures and weather-related challenges are likely to have reflected on third-quarter margins.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for Sterling this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat but that is not the case here as you will see below.
Earnings ESP: It has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sterling currently carries a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +7.33% and a Zacks Rank #3.
Jacobs Engineering Group Inc. (J - Free Report) has an Earnings ESP of +6.49% and holds a Zacks Rank #2.
Installed Building Products, Inc. (IBP - Free Report) has an Earnings ESP of +0.60% and a Zacks Rank #3.