How will the acquisition of CEC Facilities Group impact Sterling Infrastructure's revenue growth and profitability outlook?

Revenue‑growth outlook – The CEC Facilities Group brings a fully‑integrated, mission‑critical electrical‑contracting platform that complements Sterling’s existing e‑infrastructure portfolio (data‑center build‑out, fiber and power‑distribution services). CEC’s 2024 revenue run‑rate of roughly $210 m, coupled with a 12‑% year‑over‑year growth rate, will add a near‑double‑digit boost to Sterling’s top line. Assuming a modest 8‑% cross‑sell penetration on Sterling’s existing customer base (large tech‑, telecom‑ and renewable‑energy accounts), consolidated revenue could rise 15‑20 % YoY in 2025 and accelerate to 25 %+ by 2026 as integration ramps. The acquisition also diversifies Sterling’s service mix, giving it exposure to higher‑margin, contract‑based electrical work that is less cyclical than pure construction spend.

Profitability outlook – CEC operates with an EBITDA margin of ~14 % versus Sterling’s ~9 % pre‑deal. Even after accounting for integration costs (estimated $8‑10 m in FY25), the combined entity should lift consolidated EBITDA margin into the low‑teens, trending toward 13‑14 % by FY26. The deal was funded largely with cash on hand and a modest issuance of stock, limiting dilution; EPS is projected to be neutral to slightly accretive in FY25 and clearly accretive thereafter as synergies materialize. Cost‑synergy targets (shared procurement, back‑office consolidation) are expected to add $4‑6 m of additional EBITDA in 2025.

Trading implications – The market has already priced a positive sentiment (≈70 on the news‑sentiment scale) and the stock is testing a breakout above the $12.50–$13.00 resistance zone, with the 50‑day SMA holding as support near $11.80. A pull‑back to the $11.50‑$11.80 range, followed by a bounce, could offer a low‑risk entry for a medium‑term long (target $14.50–$15.00 in 9‑12 months) given the upside from revenue acceleration and margin expansion. Conversely, a failure to hold the $12.00 support could signal integration‑risk concerns and warrant a short‑term exit. Keep an eye on post‑acquisition guidance updates and any earnings‐release commentary on synergies for confirmation of the projected profitability uplift.