Sterling Infrastructure (STRL) Stock: Why It Fell 21% and What's Next

Quick answer

Sterling Infrastructure traded at $285.83 at 11:48am ET on Nov 4, 2026, down 20.9% from a $361.15 close, as investors sold the companies that build data centers after the Texas governor's race. Democrat Gina Hinojosa defeated Gov. Greg Abbott on Nov 3 after campaigning for tougher limits on new data centers, including an immediate moratorium in the state, 24/7 Wall St. reported. Wells Fargo estimates Texas holds 27% of planned U.S. data center gigawatts. Sterling, which is based in The Woodlands, Texas, had no company news. The stock opened at $339.86, which was the high of the regular session, and slid to $283.92 at 11:25am, just above its 52-week low of $281.58.

Our view: Bearish through February 24, 2027, the expected date of its fourth-quarter report. The case for the stock: the business just had a record quarter, with revenue up 127% and adjusted EPS of $7.58 against a consensus near $6.20; at $285.83 the shares trade at about 13 times the middle of the raised 2026 adjusted EPS guide; and the average analyst target is $702, more than double the price. The case against: Sterling is a Texas company with a Texas electrical arm, and the election has put a moratorium on new Texas data centers on the table, a risk the company has not sized; signed backlog grew 0.9 times as fast as it was worked off in the third quarter, so the signed book shrank slightly even as revenue more than doubled; and the stock fell from $388.87 to $335.45 in the three sessions after that beat and raise, a sign that buyers had already left before the vote. We think the case against carries more weight until the company shows where its backlog sits. We would move off Bearish if Sterling shows that Texas is a small share of its backlog, if fourth-quarter signed backlog grows faster than revenue again, or if the stock closes back above $340, the top of today's session. This is a view on direction over that window, not a recommendation to trade the stock.

Sterling Infrastructure daily closing price from Sep 21 to Nov 4, 2026, with the Oct 7 close of $534.13, the Oct 28 results and the Nov 4 drop marked

Key takeaways

Sterling Infrastructure traded at $285.83 at 11:48am ET on Nov 4, 2026, down 20.9% from a $361.15 close, after Democrat Gina Hinojosa won the Texas governor's race on Nov 3 on a platform that included a moratorium on new data centers. Sterling had no company news.
Other data center builders fell as hard: Everus was down 22.6%, Legence 20.7% and Innio 20.2%, while the Nasdaq 100 fund QQQ rose 1.4%.
Sterling is based in The Woodlands, Texas, and its CEC electrical business is based in Irving, Texas. Wells Fargo estimates Texas holds 27% of planned U.S. data center gigawatts, 24/7 Wall St. reported.
The business itself just reported its best quarter: third-quarter revenue rose 127% to $1.56 billion, adjusted EPS was $7.58, and the company raised its 2026 adjusted EPS guide to $21.70 to $21.96.
Our view is Bearish through February 24, 2027: a stock that fell after a beat and raise now faces a policy risk in its home state that the company has not yet sized, and signed backlog grew more slowly than revenue in the third quarter.

Table of contents

Nov 4, 2026: the Texas vote hits the data center builders
The numbers
The bull case
The risks
What comes next

Nov 4, 2026: the Texas vote hits the data center builders

Sterling closed Nov 3 at $361.15 after a 7.7% gain that day. Overnight the Texas result came in. Premarket trading ranged from $325.01 to $367.00, the stock opened at $339.86 and never traded above $340. It fell through the morning to $283.92 at 11:25am and was $285.83 at 11:48am, down 20.9%, on about 1.3 million shares.

What moved the stock:

A new risk in Sterling's home state. Hinojosa campaigned on limits for new data centers, including an immediate moratorium. Democrats also won or kept the governorships of Georgia, Pennsylvania and Ohio, which Wells Fargo estimates hold another 17% of planned U.S. data center gigawatts between them. Dan Ives of Yorkville Ives & Co. said the elections "will slow the pace of data center buildouts," 24/7 Wall St. reported.
The whole contractor group fell. Everus was down 22.6%, Legence 20.7%, Innio 20.2%, Forgent Power 17.7%, Quanta Services 13.0% and EMCOR 10.2% at 11:48am. Modine fell 23.5%, though it also missed estimates after the close on Nov 3. The Nasdaq 100 fund QQQ rose 1.4% in a broad rally.
No company news. Sterling issued no release on Nov 3 or Nov 4. On Nov 3 it said it would take part in upcoming investor conferences, where the Texas question is likely to come up.

At 11:46am RSI(14) stood at 26, the shares sat 38.1% below their 50-day average and 48.2% below their 200-day average, volume was already 1.5 times its 20-day average, and the stock was 71.6% below its 52-week high of $1,005.68 from June. Our AI cloud coverage shows the same vote hitting the companies that rent the capacity, and the rest of the session's movers are in today's biggest stock moves.

Bar chart of changes from the Nov 3 close to 11:48am ET on Nov 4, 2026: Everus -22.6%, Sterling -20.9%, Legence -20.7%, Innio -20.2%, Forgent Power -17.7%, Quanta -13.0%, EMCOR -10.2%, QQQ +1.4%

The numbers

Measure	Q3 2026	Change from a year earlier
Revenue	$1.56 billion	+127%
E-Infrastructure revenue	$1.30 billion	+212%
Adjusted EPS	$7.58	+118%
Adjusted EBITDA	$337.8 million	+117%
Signed backlog	$4.14 billion	+61%
Combined backlog	$6.14 billion	+78%

The CEC electrical business, bought in September 2025, contributed $425.6 million of revenue, and the company now believes it can pass $1 billion of revenue in 2026. Transportation revenue fell 3.1% and Building Solutions 5.4% as Sterling moved crews to data center work. The 2026 guide calls for revenue of $4.63 billion to $4.73 billion, adjusted EPS of $21.70 to $21.96 and adjusted EBITDA of $970 million to $981 million. Sterling had $216.9 million of cash at Sep 30 and bought back $107.3 million of stock in the first nine months. Our guide to forward and trailing P/E explains why a 13 times multiple on a guide is only as good as the backlog behind it.

The bull case

Nothing in Sterling's own numbers changed on Nov 4. The company reported a 127% revenue gain a week ago, raised its guide, and said its signed backlog, unsigned awards and next project phases add up to nearly $8 billion of scoped work, up about 90% from a year earlier. Its customers are hyperscalers and colocation providers that plan spending years ahead. The company has not said a moratorium would touch projects already under way, and its site development work grew across all regions in the quarter. At about 13 times guided 2026 earnings, the price already assumes growth slows sharply.

The risks

The first risk is the one the market priced today. Sterling has not said how much of its backlog is in Texas, and until it does, investors will assume the worst for a Texas company whose electrical arm is also based there. Our explainer on regulatory approvals as catalysts covers why policy risk tends to weigh on a stock until the rules are written down.

The second risk is momentum. The shares are down 71.6% from June, they fell after a beat and raise, and the signed backlog book-to-burn of 0.9 times means new signed work did not keep up with revenue in the quarter. Our page on post-earnings announcement drift explains why a stock that drops on good news often keeps drifting, and our guide to guidance changes covers what it means when a raise is not enough.

What comes next

The next test is what management says at its investor conferences about Texas exposure. Investors will also watch what the governor-elect proposes for new data centers. The fourth-quarter report is expected around February 24, 2027, when the 2027 outlook and the signed backlog will show whether customers are moving projects out of Texas. A close back above $340 would undercut the Bearish case.

Frequently asked questions

Why did Sterling Infrastructure stock fall on Nov 4, 2026?

Sterling fell 20.9% to $285.83 at 11:48am ET on Nov 4 after the Texas governor's race. Democrat Gina Hinojosa defeated Gov. Greg Abbott after campaigning for tougher limits on new data centers, including an immediate moratorium, 24/7 Wall St. reported. Sterling, which earns most of its growth building sites and electrical systems for data centers, had no company news. Other data center contractors fell 17% to 23%.

How much of Sterling's business is data centers?

Sterling said mission-critical projects, including data center campuses, manufacturing and semiconductor plants, make up about 95% of the nearly $7 billion of signed backlog, unsigned awards and next project phases in its E-Infrastructure segment. That segment produced $1.30 billion of the $1.56 billion of third-quarter revenue.

Does Sterling have a lot of work in Texas?

Sterling is headquartered in The Woodlands, Texas, and bought Irving, Texas-based CEC Facilities Group in September 2025. Its 10-Q says the Stone Ridge acquisition strengthened its footprint in the Pacific Northwest and Texas. The company has not said how much of its backlog sits in Texas.

What were Sterling's third-quarter 2026 results?

On Oct 28 Sterling reported revenue of $1.56 billion, up 127% with 70% organic growth, adjusted EPS of $7.58 against a consensus near $6.20, signed backlog of $4.14 billion, up 61%, and combined backlog of $6.14 billion, up 78%. It raised 2026 guidance to revenue of $4.63 billion to $4.73 billion and adjusted EPS of $21.70 to $21.96.

What is Dombey's view on Sterling Infrastructure stock?

Bearish through February 24, 2027, the expected date of its fourth-quarter report. This is a view on direction over that window, not a recommendation to trade the stock.

What would change the view on Sterling?

We would move off Bearish if Sterling shows that Texas is a small share of its backlog, if fourth-quarter signed backlog grows faster than revenue again, or if the stock closes back above $340, the top of the Nov 4 session.

Sources

Article details

By James Whitfield, Head of Equity Research, Dombey Capital

Published November 4, 2026 · 5 min read · Event-Driven Investing