Is L.B. Foster's (NASDAQ:FSTR) Share Price Gain Of 118% Well Earned?
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. For example, the L.B. Foster Company (NASDAQ:FSTR) share price has soared 118% in the last three years. That sort of return is as solid as granite. On top of that, the share price is up 38% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.
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See our latest analysis for L.B. Foster
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
L.B. Foster became profitable within the last five years. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. So it might be better to look at other metrics to try to understand the share price.
It may well be that L.B. Foster revenue growth rate of 5.1% over three years has convinced shareholders to believe in a brighter future. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
If you are thinking of buying or selling L.B. Foster stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
L.B. Foster shareholders have received returns of 4.0% over twelve months, which isn't far from the general market return. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 13% over the last five years. We're pretty skeptical of turnaround stories, but it's good to see the recent share price recovery. You could get a better understanding of L.B. Foster's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
