Back to top

Aggressive Growth

Zacks Equity Research

American Railcar Industries

ARII

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

American Railcar Industries Inc. (ARII - Snapshot Report) is expected to derive huge benefits from the booming U.S. freight railroad industry going forward. This leading manufacturer of covered hopper and tank railcars will report third-quarter results next week, and has delivered positive earnings surprises in four out of the last five quarters. Growing demand for railcars, strong order backlogs and improved pricing make this Zacks #2 Rank (Buy) stock a lucrative investment opportunity for growth-seeking investors.

Overall a Strong Second Quarter

On July 25, American Railcar reported second quarter earnings per share of 63 cents, surpassing the Zacks Consensus Estimate by 16.67% and the year-ago earnings by a whopping 2,000%. Total revenue of a little over $154.2 million increased 37.80% year over year, but lagged the Zacks Consensus Estimate by 14.36%.

American Railcar improved margins across the board in the second quarter. Quarterly gross margin was 21.67%, an improvement of 82.87% over the prior-year quarter. Operating margin was 16.83%, up nearly 130%, and net margin was 8.66%, up a massive 1,598%. Adjusted EBITDA was over $34.44 million compared with a mere $10.88 million in the prior-year quarter.

This performance is being driven by strong demand for railcars, an improved pricing environment, a favorable sales mix and positive economies of scale. During the second quarter, the company shipped 2,200 railcars and received orders for 2,810, resulting in an order backlog of 6,800 railcars as of June 30, 2012, compared with 6,190 as of March 31, 2012.

American Railcar is scheduled to report its third quarter earnings on October 24, 2012. The Zacks Consensus Estimate is 71 cents.

Attractive Earnings Estimate Revisions

The Zacks Consensus Estimate for 2012 moved up 17.04% to $2.61 in the past 90 days. There has also been a nearly 2% improvement in the past week. The Zacks Consensus Estimate for 2013 increased 20.62% to $3.10 in the past 3 months with an advance of 2.6% in 7 days.

The current Zacks Consensus Estimates indicate year-over-year gains of 1,202.50% for fiscal 2012 and 18.91% for fiscal 2013.

Valuation Looks Compelling

The valuation for American Railcar looks reasonable. The current forward P/E of 11.85x implies a premium of 25.53% over the peer group average of 9.44x. However, with respect to the Price/Sales multiple, the stock is currently trading at 1.00x, an attractive discount of 30.56% from the peer group average of 1.44x.

Solid Chart

The stock price has surged almost 21% since the announcement of the second-quarter 2012 results. The Consensus Estimate line indicates a steep upward movement through fiscal 2014. The chart clearly shows that the stock price is expected to move higher than the increasing estimate trend.

American Railcar Industries Inc. was founded in 1988, and is a leading North American manufacturer of covered hopper and tank railcars. American Railcar also leases railcars to third parties. Additionally, it offers railcar repair services, engineering and field services and fleet management services. Its current market capital is approximately $10.91 billion.


Want More of Our Best Recommendations?

Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>


Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%