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STRL vs. HWM: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Engineering - R and D Services stocks have likely encountered both Sterling Infrastructure (STRL - Free Report) and Howmet (HWM - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Sterling Infrastructure has a Zacks Rank of #2 (Buy), while Howmet has a Zacks Rank of #3 (Hold) right now. This means that STRL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

STRL currently has a forward P/E ratio of 9.37, while HWM has a forward P/E of 23.50. We also note that STRL has a PEG ratio of 0.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HWM currently has a PEG ratio of 0.98.

Another notable valuation metric for STRL is its P/B ratio of 2.20. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HWM has a P/B of 5.20.

Based on these metrics and many more, STRL holds a Value grade of A, while HWM has a Value grade of D.

STRL sticks out from HWM in both our Zacks Rank and Style Scores models, so value investors will likely feel that STRL is the better option right now.


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Sterling Infrastructure, Inc. (STRL) - free report >>

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