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Is Sterling Construction (STRL) a Great Value Stock 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.

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 a Value grade of A. The stock is trading with a P/E ratio of 7.96, which compares to its industry's average of 13.37. Over the past year, STRL's Forward P/E has been as high as 13.05 and as low as 7.24, with a median of 10.78.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. STRL has a P/S ratio of 0.45. This compares to its industry's average P/S of 0.5.

Finally, investors will want to recognize that STRL has a P/CF ratio of 6.61. 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 8.50. STRL's P/CF has been as high as 9.57 and as low as 5.96, with a median of 7.68, 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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