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Insider Invests in L.B. Foster

- By Kyle Ferguson

Bradley Vizi, director and 10% owner of L.B. Foster Co. (FSTR), purchased a combined 132,336 shares of the company between March 7 and March 24. He paid an average price of $13.20 per share according to SEC filings.

Following the purchases, Vizi now owns 1,450,760 shares of the company.

Founded in 1902 and headquartered in Pittsburgh, L.B. Foster provides products and services for the rail, construction, energy and utility markets. It operates through three segments: Rail Products, Construction Products and Tubular Products. T he company bids on rail projects where it can offer products manufactured or sourced from numerous suppliers.


The rail products segment provides new and used rail, track work and accessories to the railway, mining and other related industries.

The construction products segment provides precast concrete buildings, fabricated structural steel, bridge decking, bridge railing, expansion joints and other products for highway construction and repair. This segment has the following business units: piling, fabricated products and precast concrete buildings.

The tubular products segment provides pipe coatings for natural gas pipelines and utilities. This segment has two business units: coated pipe and threaded products.

L.B Foster has a market cap of $124.87 million, an enterprise value of $254.07 million, a price-book (P/B) ratio of 0.94, a price-sales (P/S) ratio of 0.26 and a current ratio of 2.42.

According to GuruFocus, the company has a 4 of 10 financial strength rating with a cash-debt ratio of 0.19 and an equity-asset ratio of 0.34. Its Altman Z-Score of 1.18 indicates it is in financial distress and could potentially file for bankruptcy within the next two years. The company's Beneish M-Score is -3.15 suggests it is not a manipulator of its financial statements.

The company has a 4 of 10 profitability and growth rating. It has an operating margin of -1.07%, a net margin of -29.30%, a return on assets (ROA) of -29.52% and a three-year revenue growth rate of -6.90%.

Over the past five years, the company's revenue has declined an average of -3.57% per year. In that same time, its net income has declined -211.90%, its earnings per share -194.35% and its cash flow -8.87%.

The company's market price has also been tumbling and is down by an estimated 58% over the past five years.

On March 2, L.B Foster released its fourth-quarter operating results. It reported declines in several categories.

  • The gross profit margin was 17.6%, 380 basis points lower than the prior-year quarter.

  • The company reported a sales decrease of 23.4% from the prior-year quarter to $106.6 million.

  • The company's cash flow from operations was $8 million, a 81.2% decline from $42.5 million in the comparable quarter the year before.

  • Fourth quarter net loss was $40.9 million or $3.97 per diluted share, compared to net income of $3.3 million or 32 cents per diluted share last year.



Gurus Jim Simons (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) added to their holdings of L.B. Foster during the fourth quarter. Since then, the company's market price has fallen an estimated 7%.

Below is a Peter Lynch chart showing the stock is trading below its intrinsic value.

Disclosure: Author does not own any shares of this company.

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This article first appeared on GuruFocus.


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