Forterra Inc. (NASDAQ:FRTA)

Forterra Inc. (NASDAQ:FRTA) Pops After Plunge

Forterra Inc. (NASDAQ:FRTA) Pops After Plunge

The rebound of Forterra Inc. (NASDAQ:FRTA) shares continued in Tuesday’s trading session after a breathtaking 52% collapse on disappointing second quarter financial results. The stock was up by 9.69% in Tuesday’s trading session to end the day at $4.64 a share.

Forterra Inc. (NASDAQ:FRTA)
One month FRTA stock price chart

Class Action Lawsuits

Forterra Inc (NASDAQ:FRTA) continues to trade in a strong down-trend after gapping lower on their Q2 earning’s miss. The stock is currently trading in a $3.85 – $5.25 trading range.

In addition to coming under selling pressure, Forterra is the subject of a wave of class-action lawsuits over claims its officers might have breached their fiduciary duties. Law firms are investigating the company’s executives over claims they may have provided inaccurate statements and omitted material facts ahead of the company’s IPO on October 19, 2016.

The lawsuits allege, among other things, that the IPO registration failed to disclose that Forterra Inc (NASDAQ:FRTA)’s Drainage and Water segments organic sales, had dropped significantly. Shareholders have also taken the company to task for failing to confirm it was under immense pricing pressure in the steel pipe business.

Disappointing Q3 Outlook

The claims come after Forterra Inc (NASDAQ:FRTA) reported a net income of $11.2 million for the second quarter compared to a net income of $36.7 million reported last year. Net sales in the quarter increased to $436.7 million compared to $381.7 million reported in the prior year quarter.

“Our financial results this quarter were lower than we expected, reflecting the impact of weather, unanticipated competitive pricing pressure in certain areas and higher costs of goods sold. We continue to aggressively pursue price increases and growth of higher margin products,” said Forterra Inc (NASDAQ:FRTA) CEO, Jeff Bradley.

The clearest indication that Forterra Inc (NASDAQ:FRTA) is not yet out of the woods, even after considering the weather impact on its financial reports, is the fact that it issued a lower Q3 guidance. The company says it expects its EBITDA earnings to be in the range of $50 – $60 million which is well below consensus estimates of $89 million.

According to the Chief Executive Officer, earnings will take a hit in the second half of the year due to increased costs of operation. The remarks have only gone to fuel concerns that the company strategy that sought to grow margins and earnings is no longer working.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $FRTA and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

Forterra Inc (NASDAQ:FRTA) Prospects Turn Sour

Forterra Inc (NASDAQ:FRTA)

Investor’s sentiments on Forterra Inc (NASDAQ:FRTA) have turned sour in the wake of management admitting they were struggling to generate organic growth. Ever since, the company has evoked a wave of class action lawsuits from law firms, all of which are questioning whether the management team violated its fiduciary duties.

Forterra Inc (NASDAQ:FRTA)
One month FRTA Stock Price Chart

Forterra Sell Off

Forterra Inc (NASDAQ:FRTA)’s stock was yet again on the receiving end in Thursday’s trading session after rating firm, Moody’s downgraded the company rating to B3 from B1 on concern that its outlook remains negative. Investors reacted by sending the stock down 4.60% to end the day at $3.32.

Forterra Inc (NASDAQ:FRTA) is currently trading near its all-time lows having shed more than 80% in market value since the start of the year. The sell-off wave now threatens to push the stock to its 52-week low as it continues to trade on the lower end of its $3.31-$3.60 trading range.

Fuelling the current sell-off is the company’s admission that it did not generate any organic growth in the first six months of the year. Forterra Inc. (NASDAQ:FRTA) reported net sales of $338.3 million for the first quarter up from $187 million the prior quarter. The company attributes the increase to the impact of acquisitions rather than organic growth.

Moody’s Downgrade

Moody’s concern about the company’s deteriorating operating results and credit metrics could continue to fuel the selloff wave given the risks at hand. The firm has also warned that the company’s credit profile could remain weak over the next 12 to 18 months.

“Forterra’s key credit metrics have deteriorated significantly over the last six months as debt increased and operating performance declined. The B3 corporate family rating (“CFR”) reflects our expectations for continued high debt leverage above 8.5x,” Moody’s rating in a statement.

Class Action Lawsuits

The negative outlook by Moody’s compounds Forterra Inc (NASDAQ:FRTA) woes in the market at a time when law firms are questioning its public statements. Law firms have lodged a class action investigation over claims the company failed to notify investors that its initiatives had failed to produce organic growth.

Also in question is whether Forterra Inc. (NASDAQ:FRTA) failed to notify investors that it was facing pricing pressures and operational problems at its plants. In addition, law firms are also investigating whether the company failed to disclose material weakness in internal controls relating to inventory accounting.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $FRTA and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

Q2 Financial Results Crush Forterra Inc (NASDAQ:FRTA) Stock

Forterra Inc (NASDAQ:FRTA)

Forterra Inc (NASDAQ:FRTA) stock lost over 57% in today’s trading after the company’s Q2 2017 financial results underperformed expectations. Forterra stock ended yesterday at $8.27, then gapped down to open at $6.08 before hitting an inter-day low of $3.50 which is only a penny below the stock’s closing price of $3.51. The volume was eight times the 30-day, daily average. Forterra’s stock price:

Forterra Inc (NASDAQ:FRTA)
One month stock price chart for FRTA

Forterra Business and Q2 Financials

Forterra Inc (NASDAQ:FRTA) manufactures water and drainage pipe and products in the U.S. and Eastern Canada for water-related infrastructure applications including water distribution, drainage, and stormwater management. Irving, TX-based Forterra Inc (NASDAQ:FRTA) has a product breadth and scaling ability that allow it to service all sizes of infrastructure products without the need for external suppliers.

Q2 2017 net sales increased to $436.7 million, versus $381.7 million for the same quarter of 2016. The increase was heavily driven by acquisitions which contributed $56.1 million. Net sales were negatively impacted by Tropical Storm Cindy, excessive rainfall events around the country and a decline in average sales prices of products sold.  Net income for the quarter was (-$11.2) million, or (-$0.18) per share, compared to net income of $36.7 million, or $0.70 per share, in the prior year quarter.  Adjusted net income1 was (-$1.3) million for Q2 2017 compared to adjusted net income1 of $43.4 million in the prior year quarter.  Adjusted EBITDA1 for the second quarter was $46.5 million, lower than $50 – $60 million guidance provided in Q1, compared to $74.0 million in the prior year quarter.

Forterra Inc (NASDAQ:FRTA) is guiding expectations lower for the remainder of 2017. The company is also reassessing the timetable expectations to achieve a 400 basis point increase in income from operations, EBITDA and adjusted EBITDA as a percentage of sales as compared to full-year 2016.

Forterra Stock Price Analysis

Forterra stock hit $3.50, demolishing the old 52-week low of $6.01. Prior to today’s price action, Forterra stock was down over 83% YTD. At the end of 2016, Forterra stock was trading above $22.00. On a more positive note, the stock’s Relative Strength Index stands well below 20 at 17.25, and observers believe the figure represents an “oversold” condition for shares of Forterra Inc (NASDAQ:FRTA).

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $FRTA and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

Endocyte, Inc. (NASDAQ:ECYT)

Drop Continues for Shares of Forterra Inc (NASDAQ:FRTA)

Forterra Inc (NASDAQ:FRTA)

Shares of Forterra Inc (NASDAQ:FRTA) continue to find new lows as shares dropped over 15% in today’s trading. Ten days ago, FRTA shares were flirting with the $20 level and today shares ended on their session lows at $8.91. Volumes were heavy. Over 2.68 million shares traded hands on a stock that has a 30-day, daily volume average of just 399,000.

Forterra Inc (NASDAQ:FRTA)’s slide started on May 16 when their earnings report sent investors seeking cover if not an outright exit. The company posted a (-$0.31) Q1 EPS loss. However the news that sent shareholders into a panic was the adjusted EBITDA guidance of $50 – $60 million which was well below the $89 million figure that the street was expecting. Unfortunately, Forterra Inc (NASDAQ:FRTA) suggested that Q2 figures would also disappoint. The company referenced project delays and competitive pressures. Additionally higher expenses of raw materials and labor were quoted as conditions that Forterra does not see subsiding. As of March 31, 2017 Forterra Inc (NASDAQ:FRTA) had cash on hand amounting to $27.5 million. That cash comes from a $1.26 billion loan of which only $68.1 million is available.

CEO Jeff Bradley commented that while the company is going through some short-term pain, he remains optimistic about Forterra’s long-term strength. However he optimistically included his view that the second half of 2017 should be in line with their previous expectations. He attributed his optimism to acquisitions that Forterra made in 2016 and 2017.

Following the May earnings release, SunTrust, RBC Capital Markets, and CitiGroup all downgraded FRTA shares to “Neutral”. FRTA’s Relative Strength Index (RSI) now sits at 12.43. Traders normally believe that a figure below 20 is usually a sign of an “oversold” condition.

The May earnings release of their Q1 2017 figures has spawned several law firms alleging securities violations. Class action lawsuits appear to be in the process of being filed, and clients being sought.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance