Foster L B Co (NASDAQ: FSTR)

Sector: Industrials Industry: Railroads CIK: 0000352825
Market Cap 311.69 Mn
P/B 1.78
P/E 63.78
P/S 0.61
ROIC (Qtr) 3.64
Div Yield % 0.00
Rev 1y % (Qtr) 0.60
Total Debt (Qtr) 84.43 Mn
Debt/Equity (Qtr) 0.48
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About

Foster L.B. Co., or FSTR, is a global technology solutions provider that specializes in engineered, manufactured products and services that support infrastructure development. The company has a rich history, dating back to 1902, and operates under two main reporting segments: Rail, Technologies, and Services, and Infrastructure Solutions. FSTR's main business activities involve providing a range of products and services that support infrastructure development. The Rail, Technologies, and Services segment offers various products, such as track components,...

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Investment thesis

Bull case

  • Strong operating cash flow of 37.73M provides robust 0.45x coverage of total debt 84.43M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 3.43M provide 20.53x coverage of short-term debt 167000, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 288.72M provides 3.42x coverage of total debt 84.43M, indicating robust asset backing and low credit risk.
  • Tangible assets of 288.72M provide exceptional 31.87x coverage of deferred revenue 9.06M, showing strong service capability backing.
  • Robust free cash flow of 27.79M exceeds capital expenditure of 9.95M by 2.79x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 37.73M barely covers its investment activities of (10.36M), with a coverage ratio of -3.64, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 3.43M against inventory of 69.56M, the 0.05 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Cash reserves of 3.43M provide limited coverage of acquisition spending of (416000), which is -8.24x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 16.13M show weak coverage of depreciation charges of 13.02M, with a 1.24 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 27.79M represents just -2.55x of debt issuance (10.90M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Railroads
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 UNP Union Pacific Corp 156.32 Bn 21.90 6.38 32.55 Bn
2 NSC Norfolk Southern Corp 98.17 Bn 49.09 8.45 17.09 Bn
3 CP Canadian Pacific Kansas City Ltd/Cn 77.60 Bn 25.11 7.13 17.31 Bn
4 CSX Csx Corp 76.97 Bn 26.64 5.46 18.87 Bn
5 CNI Canadian National Railway Co 67.54 Bn 19.60 5.35 15.71 Bn
6 WAB Westinghouse Air Brake Technologies Corp 44.42 Bn 37.97 3.98 5.54 Bn
7 TRN Trinity Industries Inc 2.81 Bn 29.44 1.29 5.94 Bn
8 GBX Greenbrier Companies Inc 0.96 Bn -16.79 0.84 1.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.22 1.36
EV to Cash from Ops. EV/CFO 10.84 16.53
EV to Debt EV to Debt 4.84 2.59
EV to EBIT EV/EBIT 25.36 7.63
EV to EBITDA EV/EBITDA 14.08 18.51
EV to Free Cash Flow [EV/FCF] EV/FCF 14.72 28.00
EV to Market Cap EV to Market Cap 1.31 1.04
EV to Revenue EV/Rev 0.81 2.75
Price to Book Value [P/B] P/B 1.78 3.50
Price to Earnings [P/E] P/E 63.78 21.48
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 22.50
Dividend per Basic Share Div per Share (Qtr) 0.00 1.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 15.26
Interest Coverage Int. cover (Qtr) 3.29 0.60
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -75.06 -6.16
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 9.35 35.27
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 3.76
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -88.11 17.20
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -0.98 -15.55
EBIT Growth (1y) % EBIT 1y % (Qtr) -12.79 18.03
EBT Growth (1y) % EBT 1y % (Qtr) -16.19 15.09
EPS Growth (1y) % EPS 1y % (Qtr) -87.44 15.15
FCF Growth (1y) % FCF 1y % (Qtr) 94.15 426.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -6.28 -4.94
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.52 0.57
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.16
Cash Ratio Cash Ratio (Qtr) 0.05 0.90
Current Ratio Curr Ratio (Qtr) 2.21 1.61
Debt to Equity Ratio Debt/Equity (Qtr) 0.48 1.04
Interest Cover Ratio Int Coverage (Qtr) 3.29 0.60
Times Interest Earned Times Interest Earned (Qtr) 3.29 0.60
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.70 -101.68
EBIT Margin % EBIT Margin % (Qtr) 3.18 -107.52
EBT Margin % EBT Margin % (Qtr) 2.21 -114.27
Gross Margin % Gross Margin % (Qtr) 21.80 37.55
Net Profit Margin % Net Margin % (Qtr) 1.00 -117.34