Sterling Construction's (STRL) Backlog Helps Hit 52-Week High

Shares of Sterling Construction Co. Inc. (NASDAQ:STRL) touched a fresh 52-week high of $6.86 on Aug 19, before closing lower at $6.59. This upside was driven by its booking and backlog strength.

This Houston, TX-based heavy civil construction company has a market cap of $164.8 million. Average volume of shares traded over the last three months is approximately 85.4K. Its shares witnessed a solid one-year return of nearly 36% and year-to-date return of around 8.4%.

Factors to Consider

On Aug 1, Sterling Construction posted earnings of 9 cents per share for the second quarter of 2016, which compared favorably with a loss of 13 cents in the prior-year quarter. Revenues increased 6.9% year over year in the quarter, driven by higher project activity in Nevada, Hawaii and the Rocky Mountains.

The company expects the bottom line to improve further. Sterling Construction continues to see greater sequential investment in infrastructure projects at the federal, state, and local levels. Many of the projects that will be out for bid include roads, bridges, airports, and water projects in the $20 million to $80 million range, which fits in very well with its capabilities.

On Jun 30, 2016, Sterling Construction’s backlog was $810 million comapred with $243 million at the end of second-quarter 2015. Total backlog at the end of the second quarter, including projects where the company was the apparent low bidder but with the contracts yet to be signed, totaled $919 million, same as that at the end of the first quarter of 2016. The company expects the trend to persist throughout the balance of this year and beyond.

Sterling Construction also completed an equity offering during the quarter which raised $19 million. The company used the proceeds to service a large portion of expensive debt and to fund working capital needs. Thus, the company is poised to grow on its stronger balance sheet and improved financial flexibility.

Sterling Construction currently has a Zacks Rank #4 (Sell).

Stocks to Consider

Some better-ranked stocks in the sector include MasTec, Inc. (NYSE:MTZ) , EMCOR Group Inc. (NYSE:EME) and Boise Cascade Company (NYSE:BCC) . While MasTec sports a Zacks Rank #1 (Strong Buy), both EMCOR Group and Boise Cascade Company hold a Zacks Rank #2 (Buy).