The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Sterling (NASDAQ: STRL) and the rest of the engineering and design services stocks fared in Q1.
Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.
The 5 engineering and design services stocks we track reported a very strong Q1. As a group, revenues beat analysts’ consensus estimates by 1.7% while next quarter’s revenue guidance was in line.
Luckily, engineering and design services stocks have performed well with share prices up 25.9% on average since the latest earnings results.
Best Q1: Sterling (NASDAQ: STRL)
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Sterling reported revenues of $430.9 million, down 2.1% year on year. This print exceeded analysts’ expectations by 5.4%. Overall, it was a stunning quarter for the company with full-year EBITDA and revenue guidance exceeding analysts’ expectations.
"Sterling is off to a great start in 2025, as we grew our first quarter adjusted net income by 28% to deliver adjusted diluted EPS of $1.63," stated Joe Cutillo, Sterling's Chief Executive Officer.
Sterling achieved the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 34.8% since reporting and currently trades at $224.
Dycom (NYSE: DY)
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE: DY) builds and maintains telecommunications infrastructure.
Dycom reported revenues of $1.26 billion, up 10.2% year on year, outperforming analysts’ expectations by 5.7%. The business had an exceptional quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Dycom pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 26.4% since reporting. It currently trades at $244.32.
Is now the time to buy Dycom? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: AECOM (NYSE: ACM)
Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE: ACM) provides various infrastructure consulting services.
AECOM reported revenues of $3.77 billion, down 4.4% year on year, falling short of analysts’ expectations by 9.5%. It was a mixed quarter as it posted a decent beat of analysts’ adjusted operating income estimates.
AECOM delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 11.5% since the results and currently trades at $113.96.
Read our full analysis of AECOM’s results here.
MasTec (NYSE: MTZ)
Involved in the 1996 Olympic Games MasTec (NYSE: MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.
MasTec reported revenues of $2.85 billion, up 6% year on year. This number beat analysts’ expectations by 4.9%. Overall, it was a very strong quarter as it also produced an impressive beat of analysts’ backlog estimates and a solid beat of analysts’ EPS estimates.
The stock is up 28.8% since reporting and currently trades at $172.42.
Read our full, actionable report on MasTec here, it’s free.
EMCOR (NYSE: EME)
Through its network of over 70 subsidiaries, EMCOR (NYSE: EME) provides electrical, mechanical, and building construction and services
EMCOR reported revenues of $3.87 billion, up 12.7% year on year. This print topped analysts’ expectations by 2.2%. It was a very strong quarter as it also put up a solid beat of analysts’ EBITDA estimates.
EMCOR scored the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is up 28.1% since reporting and currently trades at $530.88.
Read our full, actionable report on EMCOR here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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