L.B. Foster Company (FSTR): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Foster reported impressive second-quarter 2014 results. Earnings came in at $0.93 per share, up 31% year over year and above the Zacks Consensus Estimate of $0.84. Revenues grew 11.3% on the back of healthy Rail and Tubular segments performance. Bookings increased 34.9% while backlog at quarter-end improved 12.5%. For 2014, management anticipates to benefit from a favorable business environment, which will lead to a rise in sales and earnings. Also, the Ball Winch acquisition will boost the Tubular business while the recently purchased Carr Concrete will enhance concrete products business in the U.S. However, the presence of many players in the industry endangers the company's growth prospects. Based on these factors, we prefer to have a balanced view on the stock with a Neutral recommendation.

Overview:

L.B. Foster Company (FSTR) based in Pittsburgh, PA, offers a variety of products and services to the rail, construction, energy and utility markets. The company has a joint venture with Lally Pipe & Tube, L B Pipe & Coupling Products, LLC, holding 45% ownership interest. This joint venture is responsible for the production, marketing and selling of precision couplings and other products for the energy, utility and construction markets. Foster had roughly 830 employees as on Dec 31, 2013. The company operates in mainly three segments: Rail Products, Construction Products and Tubular Products.

The segment details are provided below:

The Rail Products segment manufactures primarily for transit authorities, railroads, industrial companies and mining applications, mainly in North America and the U.K. This segment mainly comprises the rail manufacturing and distribution, rail technology and concrete products business units. The segment's revenues are derived from rail accessories like trackwork, bolts, angle bars, rail joints, rail anchors, track spikes and track fasteners, among others. The activities of this segment generally pertain to lowering fuel usage, improving train-operating efficiency and reducing operating costs for customers.

The Construction Products segment supports an assortment of construction projects through its varied offerings. Its business units are classified into piling and fabricated products and precast concrete buildings. Piling products include sheet piling, bearing piling, pipe piling and beam piling. Fabricated products unit provides steel and aluminum products for highway, bridge and transit industries. The sales in this segment are related to the construction industry activities.

The Tubular Products segment deals with the supply of pipe coatings for natural gas pipelines and utilities. Along with this, it manufactures threaded pipe products, which include column pipe, couplings and related products for agricultural, municipal and industrial water wells.


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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 The NASDAQ OMX Group, Inc.



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