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Is Sterling Construction (STRL) a Great Value Stock Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Sterling Construction (STRL - Free Report) is a stock many investors are watching right now. STRL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 11.28, while its industry has an average P/E of 16.36. Over the past year, STRL's Forward P/E has been as high as 12.85 and as low as 6.27, with a median of 10.41.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. STRL has a P/S ratio of 0.44. This compares to its industry's average P/S of 0.7.

Finally, investors will want to recognize that STRL has a P/CF ratio of 7.55. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. STRL's current P/CF looks attractive when compared to its industry's average P/CF of 11.22. Over the past 52 weeks, STRL's P/CF has been as high as 8.94 and as low as 2.99, with a median of 6.90.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Sterling Construction is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, STRL feels like a great value stock at the moment.


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