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 methodology. The company demonstrates strong profitability, efficient capital allocation, and a healthy balance sheet, making it a compelling option for long-term investors.

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 set in our screen. This indicates exceptional efficiency in deploying capital to generate profits.
• Low Debt Relative to Free Cash Flow: The company’s Debt/FCF ratio is 0.68, meaning it could pay off all its debt in less than a year using its current free cash flow. This reflects strong financial health and flexibility.
• 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 rather than accounting adjustments.
• Solid EBIT Growth: With a five-year EBIT growth rate of 44.55%, the company has demonstrated consistent operational profitability expansion.

Fundamental Analysis Summary

Our fundamental report assigns STRL a score of 6 out of 10, with particularly high marks for profitability (9/10) and financial health (7/10). Key takeaways include:

• Profitability: STRL outperforms most peers in Return on Assets (13.07%), Return on Equity (33.01%), and Operating Margin (13.25%).
• Valuation: While the P/E ratio of 23.87 is slightly above the industry average, the strong free cash flow generation justifies the premium.
• Growth: Revenue has grown at a 13.44% annual rate over the past five years, though future growth expectations are more modest.

For investors seeking quality companies with strong fundamentals, STRL presents a well-rounded profile.

Our Caviar Cruise screener lists more quality stocks meeting these criteria.

Disclaimer

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