After reading Sterling Construction Company, Inc.'s (NASDAQ:STRL) most recent earnings announcement (30 June 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
How Well Did STRL Perform?
STRL recently turned a profit of US$24m (most recent trailing twelve-months) compared to its average loss of -US$16.3m over the past five years.
In terms of returns from investment, Sterling Construction Company has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 7.0% exceeds the US Construction industry of 6.0%, indicating Sterling Construction Company has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sterling Construction Company’s debt level, has increased over the past 3 years from 0.3% to 9.7%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Sterling Construction Company to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for STRL’s future growth? Take a look at our free research report of analyst consensus for STRL’s outlook.
- Financial Health: Are STRL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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