LB Foster Earnings: Here’s Why Investors are Selling Shares Now

LB Foster Co. (NASDAQ:FSTR) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 13.29%.

LB Foster Co. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 18.39% to $0.71 in the quarter versus EPS of $0.87 in the year-earlier quarter.

Revenue: Decreased 9.12% to $149.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: LB Foster Co. reported adjusted EPS income of $0.71 per share. By that measure, the company missed the mean analyst estimate of $0.97. It missed the average revenue estimate of $175 million.

Quoting Management: Robert P. Bauer , L.B. Foster Company’s President and Chief Executive Officer, commented, “This year continues to unfold in a very different way than 2012. Our strong 1st quarter coupled with our lower second quarter has resulted in a 1st half with sales marginally ahead of last year, and gross profit and pre-tax profit margins 25 basis points better than prior year 1st half results on an adjusted basis. While year-to-date earnings per share are below our expectations, EPS did grow 3.5% on an adjusted basis to $1.19 for the 1st half. This was also a quarter in which we saw changing order patterns. Construction segment orders turned positive, after the prolonged weakness in the construction market, and Tubular segment orders declined after what had been very strong activity for several quarters. These patterns have caused us to change our outlook for the year, particularly in light of the declining Tubular segment products orders which have above average profit margins. We expect to see a choppy order environment from quarter to quarter as customers react to changing market conditions and the swings in steel pricing that are occurring.”
Mr. Bauer went on to say, “Cash generation was strong this quarter as we improved on a few areas of working capital performance and believe there is more improvement to be achieved.”

Key Stats (on next page)…

Revenue increased 15.91% from $129.32 million in the previous quarter. EPS increased 47.92% from $0.48 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.02 to a profit $1.01. For the current year, the average estimate has moved down from a profit of $3.13 to a profit of $3.11 over the last ninety days.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)