STERLING INFRASTRUCTURE INC (NASDAQ:STRL) – A Quality Stock with Strong Fundamentals

STERLING INFRASTRUCTURE INC (NASDAQ:STRL) stands out as a potential candidate for quality investors, based on our Caviar Cruise screening strategy. The company demonstrates strong profitability, healthy financials, and consistent growth, making it worth a closer look.

Key Strengths

• High Return on Invested Capital (ROIC): STRL’s ROIC (excluding cash and goodwill) is an impressive 965.44%, far exceeding the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
• Low Debt Relative to Cash Flow: The company’s debt-to-free cash flow ratio is just 0.68, meaning it could pay off all its debt in less than a year using current cash flows. This reflects strong financial health.
• Strong Profit Quality: Over the past five years, STRL has converted 200.18% of its net income into free cash flow, well above the 75% benchmark. This suggests earnings are backed by real cash generation.
• Solid EBIT Growth: STRL has delivered a 44.55% annual EBIT growth rate over the past five years, indicating improving operational efficiency.

Fundamental Analysis Summary

Our fundamental report assigns STRL a rating of 6 out of 10, with particularly high scores in profitability (9/10) and financial health (7/10). Key highlights include:

• Profitability: The company outperforms most peers in return on equity (33.01%) and operating margin (13.25%).
• Growth: Revenue has grown at 13.44% annually over the past five years, while EPS has surged by 54.19% per year.
• Valuation: While not cheap, STRL trades at a reasonable P/E of 21.87, below the industry average.

For investors seeking quality stocks with strong fundamentals, STRL presents a compelling case.

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Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.