NEW YORK ( TheStreet) -- L.B. Foster Company (Nasdaq: FSTR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- FOSTER (LB) CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, FOSTER (LB) CO increased its bottom line by earning $1.98 versus $1.53 in the prior year. This year, the market expects an improvement in earnings ($2.29 versus $1.98).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Machinery industry average. The net income increased by 49.5% when compared to the same quarter one year prior, rising from $6.51 million to $9.74 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 31.7%. Since the same quarter one year prior, revenues rose by 29.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FSTR's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FSTR has a quick ratio of 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.