Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

LB Foster (FSTR) Continues To Underperform: Time To Sell It?

Published 07/11/2016, 06:42 AM
Updated 07/09/2023, 06:31 AM

On Jul 11, 2016, we issued an updated research report on premium railroads manufacturing firm LB Foster Co. (NASDAQ:FSTR) . The company offers a variety of unique products and services to the rail, construction, energy and utility markets through its Rail, Products, Construction and Tubular Product segments. However, the company operates through a wide global network, which exposes it to stiff competition.

Bearish Factors

Risks associated with commodity cycle, lower North American freight rail market spending, weaker-than-expected investments in civil construction and highway projects as well as existing challenges in the niche business hubs have been hurting LB Fosters’ revenues and margins.

Moreover, the company faces intense competition. In order to lower risks of market share loss and increase its efficiency, LB Foster heavily investments in new technological innovations. However, these investments are risky as these technologies might suddenly lose relevance if rival firms introduce improved technologies.

Also, the company depends on only a few suppliers for its operations. Therefore, it is likely to incur losses in case of a disruption in the adequate or timely supply of raw materials. These apart, unfavorable changes in government spending pattern might delay or halt LB Fosters’ ongoing or future projects.

In addition, demand for the company’s products and services are sensitive to changes in customer order timings.

Growth Avenues

Though we remain skeptical about the near-term prospects of this Zacks Rank #4 (Sell) stock, we expect certain positives to partially offset such adversities. Stronger coated products, test & inspection services and precision measurement systems sales are expected to boost the company’s revenues in the near term.

Also, the company is on track to widen its margin by lowering aggregate operating costs. LB Fosters’ new Enterprise Resource Planning tool is expected to boost its profitability by helping it in the optimal deployment of resources in the near future.

Stocks to Consider

Some better-ranked stocks in the industry include AK Steel Holding Corporation (NYSE:AKS) , ArcelorMittal (NYSE:MT) and Gerdau S.A. (NYSE:GGB) . All the three companies presently hold a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>



AK STEEL HLDG (AKS): Free Stock Analysis Report

ARCELOR MITTAL (MT): Free Stock Analysis Report

GERDAU SA ADR (GGB): Free Stock Analysis Report

FOSTER LB CO (FSTR): Free Stock Analysis Report

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.