Investors are assessing the relative merits of two construction companies, Sterling Infrastructure (NASDAQ:STRL) and TSS (NASDAQ:TSSI), to determine which represents a more attractive investment opportunity. This evaluation contrasts both firms across several critical areas, including financial performance, risk levels, institutional ownership, and analyst opinions.
Valuation and Earnings Analysis
A comparative analysis reveals significant differences in financial performance between Sterling Infrastructure and TSS. In terms of gross revenue, Sterling Infrastructure reported $2.12 billion, while TSS generated $148 million. The price-to-sales ratio for Sterling is 4.55, compared to TSS’s 1.51. Moreover, Sterling’s net income stands at $257.46 million, resulting in an earnings per share (EPS) of $10.20 and a price-to-earnings (P/E) ratio of 30.69. TSS, on the other hand, shows a net income of $5.98 million, with an EPS of $0.20 and a P/E ratio significantly higher at 38.75.
These figures suggest that Sterling Infrastructure not only outperforms TSS in terms of revenue and earnings but is also currently priced more attractively relative to its earnings.
Ownership and Analyst Recommendations
Institutional ownership is notably stronger in Sterling Infrastructure, with 81.0% of its shares owned by institutional investors, while TSS has only 18.9% of its shares held by insiders. This indicates a robust confidence from large financial entities in Sterling’s long-term growth prospects.
Analyst recommendations also favor Sterling Infrastructure. According to MarketBeat, it holds a consensus target price of $460.00, indicating a potential upside of 46.95%. Conversely, TSS has a consensus target price of $17.75, which suggests an even higher potential upside of 129.03%. This disparity highlights differing views among analysts regarding the future performance of these companies.
In terms of ratings, Sterling received no sell ratings, with three hold and one buy rating, resulting in a score of 3.25. TSS has a more modest performance with no strong buy, one hold, and two buy ratings, yielding a lower score of 2.50.
Profitability and Risk Assessment
Profitability metrics further differentiate the two firms. Sterling Infrastructure boasts a net margin of 14.14%, return on equity of 29.81%, and return on assets of 12.40%. TSS lags behind with a net margin of 2.08%, return on equity at 21.81%, and return on assets of 3.79%. These figures indicate that Sterling is not only more profitable but also more efficient at utilizing its assets.
In terms of stock price volatility, Sterling has a beta of 1.5, indicating it is 50% more volatile than the S&P 500. TSS presents a higher risk profile with a beta of 2.03, suggesting its stock price is 103% more volatile than the S&P 500. This higher volatility may appeal to risk-tolerant investors but poses challenges for those seeking stability.
Company Overview
Founded in 1955, Sterling Infrastructure, Inc. is headquartered in The Woodlands, Texas. The company provides a diverse range of services including e-infrastructure, transportation, and building solutions across three segments: E-Infrastructure Solutions, Transportation Solutions, and Building Solutions. Their projects involve developing infrastructure for highways, bridges, and data centers, catering primarily to blue-chip clients.
TSS, originally known as Fortress International Group, Inc., operates from Columbia, United States. The firm specializes in planning, design, engineering, and construction management for specialized facilities such as data centers and medical environments.
In summary, while Sterling Infrastructure demonstrates superior financial performance and lower volatility, TSS offers a higher potential upside according to analysts. The choice between these two companies ultimately hinges on investors’ risk tolerance and investment strategy.
