FreightCar America, Inc.

In a sign of better economic times, the future for railcar manufacturers looks bright. FreightCar America, Inc. ( RAIL - Snapshot Report ) is expected to grow earnings by over 700% in 2012 as the eastern coal car replacement cycle continues. This Zacks #1 Rank (Strong Buy) is one of those rare stocks that has both growth and value. It has a price-to-book ratio of just 1.7.

FreightCar America manufactures railroad freight cars, provides railcar parts and leases freight cars through its JAIX Leasing Company subsidiary.

Headquartered in Chicago, it builds coal cars, bulk commodity cars, flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers at 7 manufacturing facilities around the United States.

Through its FreightCar Rail Services subsidiary it also supplies railcar maintenance, repairs and management.

FreightCar America Blew Out the Zacks Consensus Estimate in the Fourth Quarter

The analysts really missed the call on this one. On Feb 17, FreightCar America crushed the Zacks Consensus by 369.2%. Earnings per share were 61 cents compared to the consensus of 13 cents. The company lost 29 cents per share in the year ago quarter.

Revenue soared 266% to $187.1 million from $51 million a year ago as railcar demand surged due to the eastern coal car replacement cycle. Fourth quarter coal loadings in North America were 2.5% higher than in the fourth quarter of 2010.

Both the manufacturing and services segments saw revenue increases in the quarter. The manufacturing segment, which is the largest segment, had revenue of $179.2 million, up from just $45 million a year ago.

The growing backlog indicates the good times should continue in the near future. An additional 4,481 units were ordered in the quarter pushing the backlog up to 8,303 units as of Dec 31, 2011. At the end of 2010, it stood at just 2,054 units.

2012 Zacks Consensus Estimate Soars

Given the huge beat in the fourth quarter, the analysts scrambled to raise 2012 estimates based on the company's continued bullishness.

5 estimates moved higher in the last week pushing the 2012 Zacks Consensus up to $1.89 from $1.51 per share.

That is earnings growth of 723% as the company made just 23 cents last year.

Still a Value Stock

Shares have rebounded in 2012 but FreightCar America still has value.

In addition to a P/B that is under 3.0, which is what I look for in a value stock, FreightCar America is trading with a forward P/E of 14.4. This is higher than its peers which average just 10.2x but it is under the 15x cut-off I use for value stocks.

Further, the company has a solid price-to-sales of just 0.7. A P/S ratio under 1.0 usually means a company is undervalued.

Railcar demand remains strong. For an investor looking for both big earnings growth and value, FreightCar America is one to watch.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.