NasdaqGS:STRL

Stock Analysis Report

Sterling Construction Company

Executive Summary

Sterling Construction Company, Inc., a construction company, engages in the heavy civil infrastructure construction and rehabilitation, construction site excavation and improvement, and residential construction activities primarily in the southern United States, the Rocky Mountain states, California, and Hawaii.

Rewards

Trading at 89.2% below its fair value

Earnings are forecast to grow 45.08% per year

Earnings have grown 69% per year over the past 5 years

Risk Analysis

Interest payments are not well covered by earnings



Snowflake Analysis

Undervalued with reasonable growth potential.


Similar Companies

Share Price & News

How has Sterling Construction Company's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: STRL has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

10.7%

STRL

3.2%

US Construction

0.9%

US Market


1 Year Return

6.7%

STRL

17.4%

US Construction

20.0%

US Market

Return vs Industry: STRL underperformed the US Construction industry which returned 17.5% over the past year.

Return vs Market: STRL underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

STRLIndustryMarket
7 Day10.7%3.2%0.9%
30 Day-0.3%0.7%1.4%
90 Day-1.7%4.2%8.8%
1 Year6.7%6.7%18.3%17.4%22.5%20.0%
3 Year55.6%55.6%9.1%6.7%49.9%40.3%
5 Year419.6%419.6%43.2%38.0%73.2%54.1%

Price Volatility Vs. Market

How volatile is Sterling Construction Company's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Sterling Construction Company undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: STRL ($14.86) is trading below our estimate of fair value ($137.02)

Significantly Below Fair Value: STRL is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: STRL is good value based on its PE Ratio (17x) compared to the Construction industry average (18.1x).

PE vs Market: STRL is good value based on its PE Ratio (17x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: STRL is good value based on its PEG Ratio (0.4x)


Price to Book Ratio

PB vs Industry: STRL is overvalued based on its PB Ratio (2.2x) compared to the US Construction industry average (1.8x).


Next Steps

Future Growth

How is Sterling Construction Company forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

45.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: STRL's forecast earnings growth (45.1% per year) is above the savings rate (1.7%).

Earnings vs Market: STRL's earnings (45.1% per year) are forecast to grow faster than the US market (14.6% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: STRL's revenue (15.3% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: STRL's revenue (15.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if STRL's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Sterling Construction Company performed over the past 5 years?

69.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: STRL has high quality earnings.

Growing Profit Margin: STRL's current net profit margins (2.2%) are higher than last year (2.2%).


Past Earnings Growth Analysis

Earnings Trend: STRL has become profitable over the past 5 years, growing earnings by 69% per year.

Accelerating Growth: STRL's earnings growth over the past year (2.4%) is below its 5-year average (69% per year).

Earnings vs Industry: STRL earnings growth over the past year (2.4%) underperformed the Construction industry 2.4%.


Return on Equity

High ROE: STRL's Return on Equity (13.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Sterling Construction Company's financial position?


Financial Position Analysis

Short Term Liabilities: STRL's short term assets ($332.7M) exceed its short term liabilities ($213.7M).

Long Term Liabilities: STRL's short term assets ($332.7M) exceed its long term liabilities ($125.1M).


Debt to Equity History and Analysis

Debt Level: STRL's debt to equity ratio (40.3%) is considered high.

Reducing Debt: STRL's debt to equity ratio has increased from 25.7% to 40.3% over the past 5 years.


Balance Sheet

Inventory Level: STRL has a low level of unsold assets or inventory.

Debt Coverage by Assets: STRL's debt is covered by short term assets (assets are 4.5x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: STRL is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: STRL is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

What is Sterling Construction Company's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage0.9%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate STRL's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate STRL's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if STRL's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if STRL's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of STRL's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.8yrs

Average management tenure


CEO

Joe Cutillo (53yo)

2.8yrs

Tenure

US$8,308,461

Compensation

Mr. Joseph A. Cutillo, also known as Joe, has been the President of Sterling Construction Company, Inc. since February, 2017 and has been its Chief Executive Officer and Director since April 28, 2017. Mr.  ...


CEO Compensation Analysis

Compensation vs Market: Joe's total compensation ($USD8.31M) is above average for companies of similar size in the US market ($USD1.68M).

Compensation vs Earnings: Joe's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Joseph Cutillo
CEO, President & Director2.8yrsUS$8.31m1.18% $4.9m
Ronald Ballschmiede
Executive VP4.4yrsUS$3.65m0.37% $1.5m
Con Wadsworth
Executive VP & COO3.9yrsUS$1.42m0.20% $809.2k
Craig Allen
Senior VP and Chief Compliance & Administration Officer1.1yrsUS$499.61k0.073% $301.4k
Richard Chandler
Executive VP2.3yrsUS$1.65m0.21% $852.9k
Kevan Blair
Senior Vice President of Corporate Finance6.4yrsUS$415.15kno data
Jennifer Maxwell
Director of Investor Relations0yrsno datano data
Kate Sberna
VP & Chief Talent Officer1.1yrsno datano data

2.8yrs

Average Tenure

60yo

Average Age

Experienced Management: STRL's management team is considered experienced (2.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Joseph Cutillo
CEO, President & Director2.8yrsUS$8.31m1.18% $4.9m
Roger Cregg
Independent Director0.8yrsno data0.061% $252.8k
Marian Davenport
Independent Director6.1yrsUS$171.75k0.15% $622.0k
Thomas White
Independent Chairman0.2yrsUS$90.35k0.10% $417.3k
Charles Patton
Independent Director6.7yrsUS$156.58k0.20% $814.8k
Raymond Messer
Independent Director2.8yrsUS$163.42k0.071% $292.4k
Dana O'Brien
Independent Director1.1yrsno data0.0098% $40.4k

2.8yrs

Average Tenure

62yo

Average Age

Experienced Board: STRL's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Sterling Construction Company, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Sterling Construction Company, Inc.
  • Ticker: STRL
  • Exchange: NasdaqGS
  • Founded: 1955
  • Industry: Construction and Engineering
  • Sector: Capital Goods
  • Market Cap: US$411.908m
  • Shares outstanding: 27.72m
  • Website: https://www.strlco.com

Number of Employees


Location

  • Sterling Construction Company, Inc.
  • 1800 Hughes Landing Boulevard
  • Suite 250
  • The Woodlands
  • Texas
  • 77380
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
STRLNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDJul 1991
UAODB (Deutsche Boerse AG)YesCommon StockDEEURJul 1991

Biography

Sterling Construction Company, Inc., a construction company, engages in the heavy civil infrastructure construction and rehabilitation, construction site excavation and improvement, and residential construction activities primarily in the southern United States, the Rocky Mountain states, California, and Hawaii. The company undertakes various heavy civil construction projects, including highways, roads, bridges, airfields, ports, light rail, water, wastewater and storm drainage systems, foundations for multi-family homes, commercial concrete projects, and parking structures for the departments of transportation in various states, regional transit authorities, airport authorities, port authorities, water authorities, and railroads, as well as commercial construction customers. It is also involved in the construction site preparation activities for blue-chip customers in the distribution center, warehousing, e-commerce, data center, big box retail, and energy sectors, as well as other growing end markets. In addition, the company undertakes concrete foundations for single-family homes. The company was formerly known as Oakhurst Company, Inc. and changed its name to Sterling Construction Company, Inc. in November 2001. Sterling Construction Company, Inc. was founded in 1955 and is headquartered in The Woodlands, Texas. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 23:48
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.