L. B. Foster Boosts Energy Business with Chemtec Buy - Analyst Blog
Premium railroads manufacturing company L. B. Foster Co. (FSTR) has strengthened its midstream market business by acquiring Texas-based Chemtec Energy Services for an undisclosed amount. The acquired firm, scheduled to operate as a wholly-owned subsidiary of L.B. Foster, is expected to augment its earnings in 2015.
The latest acquisition will serve to diversify L. B. Foster’s energy product and services portfolio in the global energy market, thereby strengthening its growth potential. Chemtec Energy Services offers high quality products in the market and is expected to generate revenues to the tune of $50 million in 2014.
Thus, the acquisition would help L. B. Foster to improve its top- and bottom-lines in the upcoming quarters. Besides, the deal would not only enhance the turnkey services of the company but also reinforce its presence in the oil and gas market.
L. B. Foster is a leading friction management solutions provider in the global railway industry. Its solutions are used for increasing the efficiency of fuel consumption and lowering the depreciation of freight as well as transit railways. The company, holding a high brand image in the market, constantly aims to enhance its shareholders’ value.
The acquired firm, Chemtec Energy Services, is a prominent producer and turnkey provider of injection, metering equipment and blending in the global oil and gas industry. The company also provides premium fabricated systems for midstream, upstream and downstream petroleum applications.
Incidentally, L. B. Foster hiked its quarterly dividend by 33% after acquiring the railroad turning unit of Balfour Beatty Rail. Positive investors’ sentiment, following the dividend announcement, helped augment the share price of the company. Furthermore, L. B. Foster has inked a distribution agreement with the U.K.-based specialized rail technology firm Tracksure for an undisclosed amount.
The deal is aimed at sustaining the construction of safer railroads. Such inorganic growth initiatives, along with the latest acquisition, are expected to improve the business goodwill and financial performance of L. B. Foster in the upcoming quarters.
With a market capitalization of $484.01 million, L. B. Foster carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Mechel OAO (MTL), Alliance Data Systems Corp. (ADS) and On Assignment Inc. (ASGN). All three stocks currently hold a Zacks Rank #2 (Buy).
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