Sterling Construction Company Inc. Stock Upgraded (STRL)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Sterling Construction Company (Nasdaq: STRL) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 28.8%. 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.
  • STRL's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for STERLING CONSTRUCTION CO INC is currently extremely low, coming in at 9.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.48% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$18.09 million or 836.56% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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Sterling Construction Company, Inc., a heavy civil construction company, engages in the building, reconstruction, and repair of transportation and water infrastructure. Sterling Construction has a market cap of $186.4 million and is part of the industrial goods sector and materials & construction industry. Shares are up 13.7% year to date as of the close of trading on Monday.

You can view the full Sterling Construction Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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