NasdaqGS:STRL

Stock Analysis Report

Sterling Construction Company

Executive Summary

Sterling Construction Company, Inc., together with its subsidiaries, operates as a heavy civil and residential construction company in Arizona, California, Colorado, Hawaii, Nevada, Texas, Utah, and other states in the United States.

Rewards

Trading at 89% below its fair value

Earnings are forecast to grow 45.08% per year

Earnings grew by 2.4% over the past year

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

-0.2%

STRL

1.5%

US Construction

0.7%

US Market


1 Year Return

25.4%

STRL

24.5%

US Construction

21.1%

US Market

Return vs Industry: STRL matched the US Construction industry which returned 24.5% over the past year.

Return vs Market: STRL exceeded the US Market which returned 21.1% over the past year.


Shareholder returns

STRLIndustryMarket
7 Day-0.2%1.5%0.7%
30 Day-4.4%-3.1%2.3%
90 Day11.6%1.8%5.0%
1 Year25.4%25.4%25.5%24.5%23.7%21.1%
3 Year69.0%69.0%4.6%2.4%47.0%37.4%
5 Year120.5%120.5%35.1%30.3%65.7%47.5%

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 ($14.18) is trading below our estimate of fair value ($128.56)

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 (16.2x) compared to the Construction industry average (17.5x).

PE vs Market: STRL is good value based on its PE Ratio (16.2x) compared to the US market (18.6x).


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 (2.1x) compared to the US Construction industry average (1.7x).


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 (14.2% per year).

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

Revenue vs Market: STRL's revenue (17.4% per year) is forecast to grow faster than the US market (7.4% per year).

High Growth Revenue: STRL's revenue (17.4% 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%) exceeded the Construction industry -0.1%.


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.

Debt Coverage: STRL's debt is well covered by operating cash flow (29.4%).

Interest Coverage: STRL's interest payments on its debt are not well covered by EBIT (2.7x coverage).


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).


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

What is the CEO of Sterling Construction Company's salary, the management and board of directors tenure and is there insider trading?

2.6yrs

Average management tenure


CEO

Joe Cutillo (53yo)

2.6yrs

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 ($USD8.31M) is above average for companies of similar size in the US market ($USD1.69M).

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


Management Age and Tenure

2.6yrs

Average Tenure

60yo

Average Age

Experienced Management: STRL's management team is considered experienced (2.6 years average tenure).


Board Age and Tenure

2.6yrs

Average Tenure

62yo

Average Age

Experienced Board: STRL's board of directors are not considered experienced ( 2.6 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

BuyUS$533,04320 Aug 19
Joseph Cutillo
EntityIndividual
Role
Chief Executive Officer
CEO, President & Director
Shares48,400
Max PriceUS$11.27
BuyUS$119,40010 May 19
Roger Cregg
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceUS$11.94

Ownership Breakdown

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


Management Team

  • Richard Chandler (62yo)

    Executive VP

    • Tenure: 2.2yrs
    • Compensation: US$1.65m
  • Ron Ballschmiede (63yo)

    Executive VP

    • Tenure: 4.3yrs
    • Compensation: US$3.65m
  • Con Wadsworth (58yo)

    Executive VP & COO

    • Tenure: 3.8yrs
    • Compensation: US$1.42m
  • Kevan Blair

    Senior Vice President of Corporate Finance

    • Tenure: 6.3yrs
    • Compensation: US$415.15k
  • Jennifer Maxwell

    Director of Investor Relations

    • Tenure: 0yrs
  • Joe Cutillo (53yo)

    CEO, President & Director

    • Tenure: 2.6yrs
    • Compensation: US$8.31m
  • Craig Allen

    Senior VP and Chief Compliance & Administration Officer

    • Tenure: 0.9yrs
    • Compensation: US$499.61k
  • Kate Sberna

    VP & Chief Talent Officer

    • Tenure: 0.9yrs

Board Members

  • Roger Cregg (63yo)

    Independent Director

    • Tenure: 0.6yrs
  • Marian Davenport (65yo)

    Independent Director

    • Tenure: 5.9yrs
    • Compensation: US$171.75k
  • Tom White (62yo)

    Independent Chairman

    • Tenure: 0yrs
    • Compensation: US$90.35k
  • Charles Patton (60yo)

    Independent Director

    • Tenure: 6.5yrs
    • Compensation: US$156.58k
  • Ray Messer (71yo)

    Independent Director

    • Tenure: 2.6yrs
    • Compensation: US$163.42k
  • Dana O’Brien (51yo)

    Independent Director

    • Tenure: 0.9yrs
  • Joe Cutillo (53yo)

    CEO, President & Director

    • Tenure: 2.6yrs
    • Compensation: US$8.31m

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$393.059m
  • 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., together with its subsidiaries, operates as a heavy civil and residential construction company in Arizona, California, Colorado, Hawaii, Nevada, Texas, Utah, and other  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/15 23:48
End of Day Share Price2019/12/13 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.