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23 May
STRL or HWM: Which Is the Better Value Stock Right Now?

Investors with an interest in Engineering - R and D Services stocks have likely encountered both Sterling Infrastructure (STRL) and Howmet (HWM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

STRL currently has a forward P/E ratio of 24.68, while HWM has a forward P/E of 34.99. We also note that STRL has a PEG ratio of 1.23. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HWM currently has a PEG ratio of 1.54.

Another notable valuation metric for STRL is its P/B ratio of 6. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HWM has a P/B of 8.45.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.