L.B. Foster (NASDAQ: FSTR) and Northwest Pipe (NASDAQ:NWPX) are both small-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.

Volatility and Risk

L.B. Foster has a beta of 2.21, suggesting that its share price is 121% more volatile than the S&P 500. Comparatively, Northwest Pipe has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares L.B. Foster and Northwest Pipe’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L.B. Foster -9.83% -27.82% -10.07%
Northwest Pipe 0.45% -1.90% -1.65%

Analyst Recommendations

This is a summary of current recommendations and price targets for L.B. Foster and Northwest Pipe, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L.B. Foster 0 0 0 0 N/A
Northwest Pipe 0 1 0 0 2.00

Northwest Pipe has a consensus price target of $9.00, indicating a potential downside of 48.19%. Given Northwest Pipe’s higher probable upside, analysts clearly believe Northwest Pipe is more favorable than L.B. Foster.

Insider and Institutional Ownership

71.1% of L.B. Foster shares are owned by institutional investors. Comparatively, 83.5% of Northwest Pipe shares are owned by institutional investors. 15.2% of L.B. Foster shares are owned by company insiders. Comparatively, 2.0% of Northwest Pipe shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares L.B. Foster and Northwest Pipe’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
L.B. Foster $263.56 million 0.77 $15.71 million ($4.49) -4.37
Northwest Pipe $138.62 million 1.21 -$4.17 million $0.06 289.50

L.B. Foster has higher revenue and earnings than Northwest Pipe. L.B. Foster is trading at a lower price-to-earnings ratio than Northwest Pipe, indicating that it is currently the more affordable of the two stocks.

Summary

Northwest Pipe beats L.B. Foster on 8 of the 12 factors compared between the two stocks.

About L.B. Foster

L.B. Foster Company is a manufacturer, fabricator and distributor of products and services for the rail, construction, energy and utility markets. The Company’s segments include Rail Products and Services, Construction Products, and Tubular and Energy Services. Its Rail Products segment provides a range of new and used rail, trackwork and accessories to railroads, mines and industry. The Rail segment designs and produces concrete railroad ties, insulated rail joints, power rail, track fasteners, coverboards and special accessories for mass transit and other rail systems. The Construction Products segment sells and rents steel sheet piling, H-bearing pile and other piling products for foundation and earth retention requirements. The Tubular and Energy Services segment supplies pipe coatings for natural gas pipelines and utilities, blending, injection and metering equipment for the oil and gas market, and produces threaded pipe products for industrial water well and irrigation markets.

About Northwest Pipe

Northwest Pipe Company is a manufacturer of engineered steel pipe water systems. The Company operates through two segments. The Water Transmission segment produces steel pipeline systems for use in drinking water infrastructure, and has approximately eight manufacturing facilities, located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; St. Louis, Missouri; Salt Lake City, Utah, and Monterrey, Mexico. The Tubular Products segment produces steel line pipe products for energy applications, and has a manufacturing facility located in Atchison, Kansas. The Company, through Water Transmission Group, produces engineered welded steel pipe products for use in water transmission applications. It also manufactures smaller diameter electric resistance welded (ERW) steel pipe through its Tubular Products Group. The Company’s solutions-based products are used in water transmission, plant piping, tunnels and river crossings applications.

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