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STRL vs. HWM: Which Stock Is the Better Value Option?

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Investors with an interest in Engineering - R and D Services stocks have likely encountered both Sterling Infrastructure (STRL - Free Report) and Howmet (HWM - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, both Sterling Infrastructure and Howmet are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

STRL currently has a forward P/E ratio of 21.98, while HWM has a forward P/E of 35.12. We also note that STRL has a PEG ratio of 1.10. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HWM currently has a PEG ratio of 1.54.

Another notable valuation metric for STRL is its P/B ratio of 5.35. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HWM has a P/B of 8.48.

Based on these metrics and many more, STRL holds a Value grade of B, while HWM has a Value grade of D.

Both STRL and HWM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that STRL is the superior value option right now.


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Sterling Infrastructure, Inc. (STRL) - free report >>

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