Stock Analysis

Is It Too Late To Consider Buying L.B. Foster Company (NASDAQ:FSTR)?

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NasdaqGS:FSTR
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L.B. Foster Company (NASDAQ:FSTR), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at L.B. Foster’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for L.B. Foster

What's the opportunity in L.B. Foster?

Good news, investors! L.B. Foster is still a bargain right now. According to my valuation, the intrinsic value for the stock is $24.61, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that L.B. Foster’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from L.B. Foster?

earnings-and-revenue-growth
NasdaqGS:FSTR Earnings and Revenue Growth January 21st 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of L.B. Foster, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although FSTR is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to FSTR, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on FSTR for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 1 warning sign for L.B. Foster and we think they deserve your attention.

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