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LB Foster (FSTR) Continues to Underperform: Time to Sell it?
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On Jul 11, 2016, we issued an updated research report on premium railroads manufacturing firm LB Foster Co. (FSTR - Free Report) . 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 , ArcelorMittal (MT - Free Report) and Gerdau S.A. (GGB - Free Report) . All the three companies presently hold a Zacks Rank #2 (Buy).
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LB Foster (FSTR) Continues to Underperform: Time to Sell it?
On Jul 11, 2016, we issued an updated research report on premium railroads manufacturing firm LB Foster Co. (FSTR - Free Report) . 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 , ArcelorMittal (MT - Free Report) and Gerdau S.A. (GGB - Free Report) . 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 >>