L.B. Foster Company (NASDAQ:FSTR) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$132m, some 3.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.18, 38% ahead of expectations. Following the result, the analyst has updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.
Taking into account the latest results, L.B. Foster's sole analyst currently expect revenues in 2022 to be US$473.9m, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 45% to US$0.12 in the same period. In the lead-up to this report, the analyst had been modelling revenues of US$463.4m and earnings per share (EPS) of US$0.24 in 2022. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The analyst also cut L.B. Foster's price target 22% to US$14.00, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales.
Of course, another way to look at these forecasts is to place them into context against the industry itself. From these estimates it looks as though the analyst expects the years of declining sales to come to an end, given the flat revenue forecast out to 2022. That would be a definite improvement, given that the past five years have seen sales shrink 2.3% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.8% per year. So it's pretty clear that, although revenues are improving, L.B. Foster is still expected to grow slower than the industry.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on L.B. Foster. Long-term earnings power is much more important than next year's profits. We have analyst estimates for L.B. Foster going out as far as 2023, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for L.B. Foster that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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