On Oct 11, 2016, LB Foster Co. (NASDAQ:FSTR) was upgraded to a Zacks Rank #3 (Hold) from a Zacks Rank #5 (Strong Sell). Going by the Zacks model, companies with a Zacks Rank #3 are likely to perform in line with the broader market over the next few quarters.
Why on Hold?
LB Foster has been boosting its top line and profitability on the back of improved bookings and backlog. The company has been steadily widening its margin by reducing operating costs on the back of its Enterprise Resource Planning ('ERP') system. LB Foster intends to generate $1 million in annualized savings benefiting from its strategic cost-saving initiatives.
However, irrespective of these favorable bullish aspects, the Zacks Consensus Estimate for the company has been revised downward for both 2016 and 2017. This reflects analysts’ cautious view on the stock.
The company’s existing issues might influence analysts’ confidence towards the stock. LB Foster’s financial results are currently being hurt due to headwinds like weak sales of certain key businesses, extensive industry rivalry and a stronger U.S. dollar. Dependence on few major suppliers, dismal climatic conditions or unfavorable government infrastructure project funding patterns remain major causes of worry for the company. These issues might limit the growth prospects of the company in the near term.
Stocks to Consider
Better-ranked stocks within the industry include Nippon Steel & Sumitomo Metal Corporation (OTC:NSSMY) , ArcelorMittal (NYSE:MT) and Angang Steel Company Limited ANGGY. All the three stocks presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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