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On Mar 12, 2014, we issued an updated research report on  L.B. Foster Company (FSTR - Analyst Report). The company delivered strong earnings per share in the fourth quarter of 2013, which increased 6% year over year to 71 cents. Quarterly revenues of $156.5 million were also up 11% year over year.

The Construction segment performed well, with sales surging 67% year over year to $62 million. The U.S. transportation construction industry has been improving from the prior-year levels. Thus, the segment is expected to continue benefiting.

Also, Foster is attempting to gain a significant market share through product launches. The company also acquired Ball Winch in Nov 2013, to strengthen the company’s foothold in the custom coating capability for items including connections, specialty fittings and large-diameter line pipe.

However, the company’s reduced backlog is a major setback. Foster recorded a backlog of $183.1 million in fourth-quarter 2013, declining 13.2% year over year. Backlog reduced 13.3%, 29.9% and 9.7% year over year for Rail segment, Tubular segment and Construction segment, respectively. Moreover, Transit Products and concrete ties business are expected to decline in 2014.

Expected decline in some segment led to negative estimate revisions for 2014 and 2015 over the past 30 days. As a result, the Zacks Consensus Estimate for 2014 and 2015 declined 5.2% and 2.7% over the same time frame to stand at $3.08 and $3.60, respectively.

Key Picks from the Sector

Foster currently carries a Zacks Rank #4 (Sell). Other players in the industry include AK Steel Holding Corp. (AKS - Analyst Report), CaesarStone Sdot-Yam Ltd. (CSTE - Snapshot Report) and United States Steel Corp. (X - Analyst Report).

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