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LB Foster Shares Up on Acquisition, 33% Dividend Hike - Analyst Blog

LB Foster Co. ( FSTR ), the premium railroad, tubular and construction product manufacturing firm has increased its quarterly dividend by 33% to 4 cents per share on Oct 31, 2014. The company has announced the dividend rise after announcing the acquisition of a Balfour Beatty Rail unit a couple of days back. The share price of the company has roughly increased by 6% from the date of the acquisition announcement in Oct 29 2014.

The Acquisition

LB Foster is a leading friction management solutions provider in the global railway industry. Its solutions are used for increasing the efficiency of fuel consumption and lowering the depreciation of freight as well as transit railways. Enjoying a high brand image in the market, the company constantly aims to enhance its shareholders' value.

The acquired firm, FWO -- the railroad turning unit of Balfour Beatty Rail's German business division -- provides switch roller equipment and track lubrication products for global railway applications. Balfour Beatty Rail is a popular multinational company offering premium construction, support and professional services in the global infrastructure market. The company is also well recognized as a prominent construction investor.

Moving Forward

According to L.B. Foster's Chief Executive Officer, the acquisition will help expand the track product and friction management business segment of the company. Thus, the deal will boost the scale and scope of the company's trading activities in Europe. Further, the acquisition will help improve and diversify the service quality of L.B. Foster.

Apart from implementing strategic attempts to expand business in Europe, the organization has also decided to enhance its shareholders' value in the market. Consequently, it has announced a hike in its dividend by a penny per share in the upcoming quarter.

Given the benefits of the new acquisition and improving share price, LB Foster currently sports a Zacks Rank #2 (Buy). Some other stocks worth considering in the industry include Nucor Corp. ( NUE ), Mechel OAO ( MTL ) and Steel Dynamics Inc. ( STLD ). While Nucor is presently sporting a Zacks Rank #1 (Strong Buy), both Mechel OAO and Steel Dynamics carry a Zacks Rank #2 (Buy).

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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.


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

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