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Is Sterling Construction (STRL) Stock Undervalued Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Sterling Construction (STRL - Free Report) is a stock many investors are watching right now. STRL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 11.23. This compares to its industry's average Forward P/E of 15.42. Over the past year, STRL's Forward P/E has been as high as 12.85 and as low as 7.54, with a median of 10.74.

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 0.46. This compares to its industry's average P/S of 0.7.

Finally, investors should note that STRL has a P/CF ratio of 7.88. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. STRL's P/CF compares to its industry's average P/CF of 10.68. Over the past 52 weeks, STRL's P/CF has been as high as 8.94 and as low as 4.06, with a median of 7.19.

Value investors will likely look at more than just these metrics, but the above data helps show that Sterling Construction is likely undervalued currently. And when considering the strength of its earnings outlook, STRL sticks out at as one of the market's strongest value stocks.


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