LB Foster Company Stock Downgraded (FSTR)

NEW YORK ( TheStreet) -- LB Foster Company (Nasdaq: FSTR) has been downgraded by TheStreet Ratings from buy to hold. 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 and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.

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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FOSTER (LB) CO increased its bottom line by earning $2.23 versus $1.98 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.23).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 396.2% when compared to the same quarter one year prior, rising from $0.68 million to $3.37 million.
  • The gross profit margin for FOSTER (LB) CO is rather low; currently it is at 21.30%. Regardless of FSTR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.80% trails the industry average.
  • FSTR has underperformed the S&P 500 Index, declining 19.51% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

L. B. Foster Company engages in the manufacture, fabrication, and distribution of products and services for the rail, construction, energy, and utility markets in the United States. It operates in three segments: Rail Products, Construction Products, and Tubular Products. The company has a P/E ratio of 10.7, equal to the average wholesale industry P/E ratio and below the S&P 500 P/E ratio of 17.7. LB Foster has a market cap of $271.4 million and is part of the services sector and wholesale industry. Shares are down 5.9% year to date as of the close of trading on Tuesday.

You can view the full LB Foster Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
null

If you liked this article you might like

5 Stocks Insiders Love Right Now

3 Transportation Stocks Nudging The Industry Higher

LB Foster Company Stock Upgraded (FSTR)

L.B. Foster Company Stock Upgraded (FSTR)