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Is Sterling Construction (STRL) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.

One company to watch right now is Sterling Construction (STRL - Free Report) . STRL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.27, which compares to its industry's average of 14.32. Over the past year, STRL's Forward P/E has been as high as 13.05 and as low as 9.16, with a median of 10.96.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. STRL has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.57.

Finally, our model also underscores that STRL has a P/CF ratio of 8.14. 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. This stock's P/CF looks attractive against its industry's average P/CF of 8.48. STRL's P/CF has been as high as 9.57 and as low as 6.80, with a median of 7.74, all within the past year.

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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