What Happened?
Shares of railway infrastructure company L.B. Foster (NASDAQ:FSTR) jumped 5.3% in the afternoon session after its second-quarter report showed improved profitability and a strong profit forecast that overshadowed an earnings miss. While the company's GAAP earnings of $0.27 per share fell short of Wall Street's estimates, and revenue of $143.6 million was roughly in line with expectations, investors focused on the positives. The company's adjusted EBITDA beat analyst estimates, coming in at $12.23 million, and its operating margin expanded significantly to 5.3% from 3.2% in the same quarter last year. Free cash flow also turned positive at $7.73 million. Looking forward, despite lowering its full-year revenue guidance, L.B. Foster's full-year EBITDA forecast of $42 million came in above consensus estimates, signaling underlying confidence in its profitability.
After the initial pop the shares cooled down to $22.70, up 2.8% from previous close.
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What Is The Market Telling Us
L.B. Foster’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 6.4% on the news that the major indices rebounded (Nasdaq +2.0%, S&P 500 +2.0%) as President Trump postponed the planned 50% tariff on European Union imports, shifting the start date to July 9, 2025. Companies with substantial business ties to Europe likely had some relief as the delay reduced near-term cost pressures and preserved cross-border demand.
L.B. Foster is down 14.5% since the beginning of the year, and at $22.70 per share, it is trading 22.9% below its 52-week high of $29.45 from December 2024. Investors who bought $1,000 worth of L.B. Foster’s shares 5 years ago would now be looking at an investment worth $1,473.
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