Textainer Group Holdings Limited (TGH - Snapshot Report) recently surprised on the Zacks Consensus Estimate by 18% as the worldwide shortage of containers continues to boost the bottom line.
Textainer is the largest lessor of intermodal containers in the world. It leases dry freight, refrigerated and specialized containers to more than 400 shipping lines.
The company also sells used containers to more than 1,000 customers.
Revenue Jumped 37% in the Second Quarter
On Aug 12, Textainer reported second quarter results which surprised on the Zacks Consensus by 9 cents.
Earnings per share were 59 cents compared to the consensus of 50 cents. The company made 53 cents in the year ago quarter.
Sales rose to $74.5 million from $54.4 million in the second quarter of 2009.
Utilization rose to a record of 98.3% from 91.8% in the first quarter of 2010 and 88.6% in the fourth quarter of 2009. The company forecasts the increased lease revenue and reduced storage expense from the high utilization rate continuing throughout the rest of 2010.
Textainer expects the shortage in containers to last through 2010 and possibly into 2011. Cargo volumes are also expected to rise 10% in 2010.
The company has purchased or ordered the largest single year number of new containers in its 31-year history- of over 198,000 TEU at the cost of $458.5 million. About 90% of the orders are for Textainer's own account.
Textainer has a stellar track record of raising its dividend, having done so each of the last 11 quarters.
This last dividend increase was 4.3%, or 1 penny, to 25 cents per share. That is a current yield of 3.6%.
Zacks Consensus Estimates Rise
1 estimate has moved higher for 2010 in the last 30 days, pushing the Zacks Consensus up by 7 cents to $2.43 per share.
This is earnings growth of 44%. Analysts also expect 11.5% growth in 2011.
Textainer is trading at a cheaper valuation than its peers, at 11.3x forward estimates compared to its peers at 12.2.
The price-to-book ratio is higher, however, at 2.2 compared to its peers at 1.0.
But Textainer's return on equity (ROE) of 15.6% easily beats its peers at 7.9%.
Textainer is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.