Genesee & Wyoming Inc. analysts are raising their forecasts, as the industry in general is looking good. Growth rates are looking attractive, shares have solid valuations and the company is a Zacks #1 Rank (Strong Buy).
Genesee & Wyoming Inc. owns and operates short line and regional freight railroads in North America, Australia and a few in Europe.
EPS Up 33%
Genesee's last quarterly report was back on Apr 28 and showed a 32% top-line increase, to $192 million. Some of that increase was due to an acquisition but comps were up almost 16%.
Net income was up $6.1 million, to $22.1 which is a 38% increase. That broke down to an impressive $0.39 per share. While that fell a nickel short of expectations, the overall quarterly report was good enough for analysts to raise estimates.
The Zacks Consensus Estimate for 2011 is up 11 cents, to $2.73 on the news. Next year's average forecast is up 24 cents, to $3.27. In 2010 Genesee made $2.13 a share, putting expected growth rates at 28% and 20%, respectively.
Currently the long-term earnings growth rate is about 21%, which is priced right. The P/E of 21 times put the PEG right at 1.0.
Railroads are currently ranked at the 41st industry, out of 265 based on the Zacks Rank. And Genesee is at the top of the 8-company group.
Shares of GWR have been on a steady decline through the selling we saw over the past 2 months. The stock has failed to break through that trend line a couple of times now. However, with the market showing signs of life and a positive MACD cross showing a shift in momentum, this could be on verge of a nice breakout.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service