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Sterling (STRL) Buys CCS for $22M, Aids Building Solutions Arm
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Sterling Infrastructure, Inc. (STRL - Free Report) acquired Concrete Construction Services of Arizona L.L.C. and its affiliated company (collectively known as “CCS”) for $22 million in a combination of cash and its common stock, which equates to 2.5-3.5 times of EBITDA.
CCS offers residential single-family home concrete foundations in the Greater Phoenix area. CCS provides the preparation, pouring and finishing of post-tension concrete foundations in new housing subdivisions to a broad range of high-quality private and public customers.
Joe Cutillo, Sterling’s chief executive officer, said, “The addition of CCS to our Building Solutions segment allows us to expand our breadth of residential service offerings to our key blue-chip customers in Arizona. The population shifts in the area have significantly increased the demand for our residential services, and this tuck-in acquisition broadens our capacity.”
Image Source: Zacks Investment Research
In the after-hour trading session of Dec 20, its shares dipped 3.61%. Nonetheless, the stock gained 37.7% compared with Zacks Engineering - R and D Services industry’s 5.9% increase, in the past six months.
Strategies to Expand & De-Risk Business
This Woodlands, TX-based company specializes in E-Infrastructure, Building and Transportation Solutions principally in the United States, mainly across the Southern, Northeastern, Mid-Atlantic and Rocky Mountain states, California and Hawaii.
It mainly banks on a business expansion strategy, solid project execution and the E-Infrastructure Solutions business prospect. The company has been navigating the ongoing supply chain and inflation challenges with growth in its E-Infrastructure Solutions (its largest segment), E-Infrastructure and Building Solutions. Focus on the execution of strategic objectives also bodes well.
In December 2021, Sterling completed the acquisition of Petillo LLC and its related entities. Petillo is a leading specialty site development solution provider in the Northeast and Mid-Atlantic. Also, it acquired Kimes & Stone, which provides diverse services, including soil stabilization for site development on e-commerce projects such as large fulfillment and distribution centers and data centers as well as soil stabilization for roadways and manufacturing plant construction.
Recently, STRL announced that it would divest its 50% ownership interest in its partnership with Myers & Sons Construction L.P. for $18 million in cash. The divestiture is in-line with the strategy of reducing its portfolio of low-bid heavy highway projects in order to increase margins and focus on strategic geographies.
A few better-ranked stocks in the Zacks Construction sector are EMCOR Group Inc. (EME - Free Report) , Altair Engineering Inc. (ALTR - Free Report) and ChampionX Corp. (CHX - Free Report) , each carrying a Zacks Rank #2 (Buy).
EMCOR: Headquartered in Norwalk, CT, this heavy construction company provides electrical and mechanical construction and facilities services in the United States. EMCOR has been benefiting from solid execution in the U.S. Construction segment — comprising the U.S. Mechanical and Electrical Construction units — as well as disciplined cost control. Also, accretive buyouts have been strengthening its overall results by adding new markets, opportunities and capabilities.
EMCOR’s 2023 earnings estimates have increased to $9.10 per share from $8.79 over the past 60 days. Earnings for 2023 are expected to grow nearly 17%.
Altair: This Troy, Michigan-based company provides software and cloud solutions in simulation, high-performance computing, data analytics and artificial intelligence worldwide. Despite significant macroeconomic uncertainty, ALTR has been registering solid growth in billings on a constant-currency basis and witnessing strong demand across all geographies. The company’s focus on delivering services with outstanding technology developments and applications is expected to drive growth.
Altair’s earnings for 2023 are expected to witness 21.5% growth from the year-ago report.
ChampionX: This engineering services company provides chemistry solutions, engineered equipment and technologies to companies that drill for and produce oil and gas. CHX’s Chemical Technologies offering consists of chemistry solutions for flowing oil and gas wells as well as chemistry solutions used in drilling and completion activities. The company has successfully implemented price increases and surcharges to offset cost inflation. Moreover, CHK remains optimistic about the constructive demand tailwinds in its businesses that support a favorable multi-year outlook for the sector.
ChampionX has an expected earnings growth rate of 46.3% for the next year. The Zacks Consensus Estimate for next-year earnings has improved 4.7% over the last 30 days.
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Sterling (STRL) Buys CCS for $22M, Aids Building Solutions Arm
Sterling Infrastructure, Inc. (STRL - Free Report) acquired Concrete Construction Services of Arizona L.L.C. and its affiliated company (collectively known as “CCS”) for $22 million in a combination of cash and its common stock, which equates to 2.5-3.5 times of EBITDA.
CCS offers residential single-family home concrete foundations in the Greater Phoenix area. CCS provides the preparation, pouring and finishing of post-tension concrete foundations in new housing subdivisions to a broad range of high-quality private and public customers.
Joe Cutillo, Sterling’s chief executive officer, said, “The addition of CCS to our Building Solutions segment allows us to expand our breadth of residential service offerings to our key blue-chip customers in Arizona. The population shifts in the area have significantly increased the demand for our residential services, and this tuck-in acquisition broadens our capacity.”
Image Source: Zacks Investment Research
In the after-hour trading session of Dec 20, its shares dipped 3.61%. Nonetheless, the stock gained 37.7% compared with Zacks Engineering - R and D Services industry’s 5.9% increase, in the past six months.
Strategies to Expand & De-Risk Business
This Woodlands, TX-based company specializes in E-Infrastructure, Building and Transportation Solutions principally in the United States, mainly across the Southern, Northeastern, Mid-Atlantic and Rocky Mountain states, California and Hawaii.
It mainly banks on a business expansion strategy, solid project execution and the E-Infrastructure Solutions business prospect. The company has been navigating the ongoing supply chain and inflation challenges with growth in its E-Infrastructure Solutions (its largest segment), E-Infrastructure and Building Solutions. Focus on the execution of strategic objectives also bodes well.
In December 2021, Sterling completed the acquisition of Petillo LLC and its related entities. Petillo is a leading specialty site development solution provider in the Northeast and Mid-Atlantic. Also, it acquired Kimes & Stone, which provides diverse services, including soil stabilization for site development on e-commerce projects such as large fulfillment and distribution centers and data centers as well as soil stabilization for roadways and manufacturing plant construction.
Recently, STRL announced that it would divest its 50% ownership interest in its partnership with Myers & Sons Construction L.P. for $18 million in cash. The divestiture is in-line with the strategy of reducing its portfolio of low-bid heavy highway projects in order to increase margins and focus on strategic geographies.
Zacks Rank & Key Picks
Currently, STRL carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the Zacks Construction sector are EMCOR Group Inc. (EME - Free Report) , Altair Engineering Inc. (ALTR - Free Report) and ChampionX Corp. (CHX - Free Report) , each carrying a Zacks Rank #2 (Buy).
EMCOR: Headquartered in Norwalk, CT, this heavy construction company provides electrical and mechanical construction and facilities services in the United States. EMCOR has been benefiting from solid execution in the U.S. Construction segment — comprising the U.S. Mechanical and Electrical Construction units — as well as disciplined cost control. Also, accretive buyouts have been strengthening its overall results by adding new markets, opportunities and capabilities.
EMCOR’s 2023 earnings estimates have increased to $9.10 per share from $8.79 over the past 60 days. Earnings for 2023 are expected to grow nearly 17%.
Altair: This Troy, Michigan-based company provides software and cloud solutions in simulation, high-performance computing, data analytics and artificial intelligence worldwide. Despite significant macroeconomic uncertainty, ALTR has been registering solid growth in billings on a constant-currency basis and witnessing strong demand across all geographies. The company’s focus on delivering services with outstanding technology developments and applications is expected to drive growth.
Altair’s earnings for 2023 are expected to witness 21.5% growth from the year-ago report.
ChampionX: This engineering services company provides chemistry solutions, engineered equipment and technologies to companies that drill for and produce oil and gas. CHX’s Chemical Technologies offering consists of chemistry solutions for flowing oil and gas wells as well as chemistry solutions used in drilling and completion activities. The company has successfully implemented price increases and surcharges to offset cost inflation. Moreover, CHK remains optimistic about the constructive demand tailwinds in its businesses that support a favorable multi-year outlook for the sector.
ChampionX has an expected earnings growth rate of 46.3% for the next year. The Zacks Consensus Estimate for next-year earnings has improved 4.7% over the last 30 days.