NEW YORK (
-- Sterling Construction Company
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- The gross profit margin for STERLING CONSTRUCTION CO INC is currently extremely low, coming in at 7.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.00% trails that of the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Construction & Engineering industry and the overall market, STERLING CONSTRUCTION CO INC's return on equity is below that of both the industry average and the S&P 500.
- STRL's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, STRL has a quick ratio of 2.32, which demonstrates the ability of the company to cover short-term liquidity needs.
- STRL's revenue growth has slightly outpaced the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 15.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Sterling Construction Company, Inc., together with its subsidiaries, operates as a heavy civil construction company that specializes in the building, reconstruction, and repair of transportation and water infrastructure primarily in Texas, Utah, and Nevada. The company has a P/E ratio of 13.5, above the average materials & construction industry P/E ratio of 12.4 and below the S&P 500 P/E ratio of 17.7. Sterling Construction has a market cap of $230.3 million and is part of the
industry. Shares are up 2.6% year to date as of the close of trading on Monday.
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