Textainer Group Holdings, Inc. (TGH - Snapshot Report) recently hit a all-time high at $25.98 after jumping higher on strong Q1 results from early May. The company has an average earnings surprise of 18% over the last four quarters and a solid next-year estimates projecting 12% growth.
Textainer Group Holdings Ltd., through its subsidiaries, owns, manages and leases intermodal containers worldwide. The company was founded in 1979 and has a market cap of $1.18 billion.
There are a handful of industries that the market views as being indicators of economic strength or weakness, with transports sitting at the top of the list. If that's the case, then there is reason for optimism after taking a look at Textainer's performance over the last year, highlighted by better than expected Q1 results from May 5 that showcase surging demand for the company's shipping products.
Revenue for the period was up 16% from last year to $69 million. Earnings also looked good, coming in at 52 cents, 24% ahead of the Zacks Consensus Estimate. In spite of one small miss two quarters ago, Textainer has an average earnings surprise of 18% over the last four quarters.
Although Textainer looks strong right now, its longer-term view looks good too, with CEO John Maccarone noting that 70% of its fleet is committed to long-term leases, allowing the company to score an awesome 90% utilization rate during the quarter.
With strong demand driving the company's results, Textainer has moved to increase its fleet, ordering 70,000 new containers, with 66,000 (94%) already locked into long-term contracts.
Strong Balance Sheet
Textainer's ability to invest in capital resources is a product of its healthy balance sheet, with $56 million in cash and equivalents and a debt-to-equity ratio of 1.1:1, ahead of its peer average of 1.4:1.
The analysts were encouraged by Textainer's results, raising estimates on the optimistic tone. The current-year estimate is up 23 cents in the last month to $2.05 while the next-year estimate has added 19 cents to $2.29, a 12% growth projection.
Textainer also has a pretty compelling valuation, trading with a forward P/E of 12X, in line with its industry peers.
TGH recently hit a new all-time high after weathering some short-term volatility. Look for support from the long-term trend line on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.