Combining municipal construction operations with mineral exploration sounds like it should be something out of a Dickens novel ("It was the best of times ..."), but that's the basic story at Layne Christensen (Nasdaq:LAYN). While mineral exploration activity continues at a strong pace, municipalities are spending less on water projects. While Layne Christensen has an interesting mix of businesses and seems undervalued today, management must prove that it can consistently deliver free cash flow, if this stock is going to work.
A Disappointing Result
Layne Christensen did not post an especially strong third quarter. Though this relatively under-followed company beat the revenue expectation and posted 9.3% top line growth, margins and earnings were disappointing.
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