We issued an updated research report on
L. B. Foster Company
) on Jun 10, 2014. The company has been attempting to gain a higher
market share by launching products in the near term. L.B. Foster
plans to spend roughly $18−$22 million in 2014 for product
launches, expansion into new markets and improvement of its cost
The company has strong inorganic growth potential as well. It
acquired Ball Winch Pipeline Services in Nov 2013, which will yield
significant financial contribution in the quarters to come. The
Ball Winch integration will enable the company to flourish in
Houston, TX and is expected to generate annual revenues of $15
million in 2014. This will, in turn, increase the tubular segment
However, L.B. Foster faces stiff rivalry from other market
players for most of its products. To survive in a highly
competitive market, the company has to put in a lot of effort in
order to remain updated and in sync with the current technologies.
This entails a considerably large expenditure on research and
Moreover, L.B. Foster's main raw material, steel, is exposed to
price fluctuations and availability. In case there is a disruption
in adequate or timely supply of raw materials, Foster may incur
The company recorded lower-than-expected earnings and revenues
for the first quarter of 2014. While earnings dropped 27% year over
year to 48 cents per share, revenues fell 14% year over year to
$111 million. However, Foster recorded a backlog of $353.3 million
in first-quarter 2014, increasing 2.1% year over year and 38.3%
With a market capitalization of $550.3 million, L.B. Foster
carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the
Universal Stainless & Alloy Products Inc.
Gibraltar Industries, Inc.
). While Universal Stainless & Alloy Products sports a Zacks
Rank #1 (Strong Buy), both ThyssenKrupp and Gibraltar Industries
hold a Zacks Rank #2 (Buy).
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