L.B. Foster Company

L.B. Foster Company (FSTR - Snapshot Report) is positioned for big gains if the federal government pours money into infrastructure. The 106-year old company saw revenue grow 7.2% in the third quarter as rail and construction product sales remained strong. FSTR has a forward P/E of 13.42.

Company Description

L.B. Foster Company manufactures products for the nation's infrastructure, including for the rail, construction, utility and energy industries. Founded in 1902, the company supplies rail, piling, bridge decking and highway products and threaded and coated pipe.

In 1999, the company acquired CXT Inc, which manufactured engineered concrete products for the railroad and transit industries, in order to expand its offerings to the rail industry.

L.B. Foster has recently worked on several national projects, including materials for the Brooklyn Bridge rehabilitation and transit fasteners for the transit system rebuild under the World Trade Center.

Third Quarter Sales Climb 7.2%

L.B. Foster reported third quarter earnings on Oct 23 that beat Wall Street estimates by 16.92%. Sales grew 7.2% to $145.6 million from $135.8 million in the third quarter of 2007.

The increase was due to solid performance in the Construction Products and Rail Products segments. The Tubular segment was lower than last year's pace, but the company said it was still having a strong year.

Backlog is up 7.9% to $178.9 million from a year ago.

Net income rose 19% to $8.1 million, or 76 cents per share, compared to adjusted net income of $7.0 million, or 64 cents, in 2007.

Stock Repurchase Program Extended

On Oct 28, L.B. Foster announced an additional stock repurchase of up to $15 million of its shares until Dec 31, 2010. This authorization was in addition to the previously announced $25 million stock repurchase program.

Through Oct 23, the company had repurchased shares totaling $24.8 million under that program, including $6 million during the third quarter.

Consensus Estimates Rise for the Fourth Quarter and 2008

Covering analysts are bullish about the company's future, given the possibility of future government investment in infrastructure under the Obama Administration. Fourth-quarter estimates are up 3 cents to 49 cents in the last 60 days.

2008 full-year consensus estimates rose 6.4% in the last 2 months to $2.30 from $2.16 per share.

Value Fundamentals

L.B. Foster Company is a Zacks #1 Rank (strong buy) stock. The company has surprised on estimates 4 consecutive quarters by an average of 34.60%.

It's trading at 13.4x forward earnings. Its price-to-book is 1.57. The company has a solid 1-year return on equity (ROE) of 13.2%.

Read the full analyst report on FSTR