Investors with an interest in Building Products - Heavy Construction stocks have likely encountered both Sterling Construction (STRL) and Granite Construction (GVA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Sterling Construction and Granite Construction are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, 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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
STRL currently has a forward P/E ratio of 13.89, while GVA has a forward P/E of 17.54. We also note that STRL has a PEG ratio of 1.26. 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. GVA currently has a PEG ratio of 2.51.
Another notable valuation metric for STRL is its P/B ratio of 2.35. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GVA has a P/B of 2.37.
These are just a few of the metrics contributing to STRL's Value grade of B and GVA's Value grade of C.
STRL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that STRL is likely the superior value option right now.
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Sterling Construction Company Inc (STRL) : Free Stock Analysis Report
Granite Construction Incorporated (GVA) : Free Stock Analysis Report
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