Construction spending continues to decline with no end in sight yet, therefore construction industry stocks continue to tank. But there are bits of good news in the sector. Gehl Company (Nasdaq: GEHL), a small construction company in terms of both products and balance sheet, offers some upbeat news. True, FY 2007 net sales declined 6% to $457.6 million, but the company did report income from continuing operations of $25 million, or $2.00 per diluted share. What is more encouraging is that Gehl's market share in the domestic market continues to increase despite an overall contracting market. International sales of smaller-sized skid loaders and telehandlers, two of Gehl's best-selling products, grew 31% over 2006 sales by volume, accounting for 29% of Gehl's total sales for FY 2007.

Gehl managed to hold administrative expenses essentially flat in FY 2007, while improving gross margins. Income from financing contracts declined as expected in a slowing market, and bad debt expenses increased by $3.7 million as clients defaulted on their payments. Gehl CEO William Gehl remains optimistic that FY 2008 net sales will be in the $405-$425 million range, with increasing emphasis on international sales. The company is enhancing its international supply-chain distribution network. The company's order backlog is up 142% to $95 million, so Gehl anticipates FY 2008 diluted earnings per share (EPS) of $0.95 to $1.20. Given the growing construction industries in Brazil, China and India, Gehl's smaller-sized equipment just may fit their bill. The stock is currently trading at $14 and change.