Textainer Group Holdings Limited

Textainer Group Holdings is finding that a weaker dollar and greater export demand means higher utilization rates for its containers. The company surprised on estimates in the first quarter by 23.68%. Its forward P/E is 11.32.

Full Analysis

Textainer Group Holdings Limited (TGH - Snapshot Report) leases standard and special dry freight marine containers to international shipping lines. The company has 14 regional and area offices worldwide and 350 independent depots in another 130 locations.

Textainer, a Zacks #1 Rank (Strong Buy), leases containers to more than 400 shipping lines and other lessees and sells used containers to over 700 customers. The company has more than 2.1 million TEU in its fleet. Its most common container is the dry freight container.

TGH also sells its used containers, selling an average of more than 53,000 containers per year over the last five years.

Textainer Beats Wall Street Estimates for the First Quarter

Textainer Group Holdings reported first quarter earnings on May 5 that surprised on estimates by 23.68%, or nine cents a share. Net income excluding unrealized losses on interest rate swaps, net(1) for the quarter increased 29% to $22.5 million, or 47 cents per share, from $17.5 million, or 45 cents per share, earned in the prior year quarter. Analysts expected 38 cents per share.

Total revenues rose by 22% to $72.2 million compared to $59.2 million in the first quarter 2007. The company attributed the increase to higher trading container sales proceeds of $13.7 million compared to $3.1 million in the first quarter of 2007.

"I am very pleased with our first quarter 2008 results. Overall demand for our containers through March was strong. Textainer's utilization continued to remain around 93% during the first quarter of 2008," said John A. Maccarone, President and CEO.

The company is bullish about the outlook. Shipping companies are adding more containers as they add vessels to their fleets due to high fuel costs reducing shipping speeds. The shippers have had to add vessels to maintain shipping schedules. The company continues to see demand for in-fleet containers throughout Asia. TGH also expects its resale division to continue to experience relatively high sales volume.

Consensus Estimates Rise for the Second Quarter and the Full Year

Consensus estimates have been rising over the last 60 days for both the second quarter and the year. For the second quarter, estimates are up seven cents to 46 cents from 39 cents per share. For the year, estimates are up 11% in the last two months to $1.72 from $1.55 per share.

Textainer Group Holdings' forward P/E is 11.32, under the industry average of 13.79. Its price-to-book is 2.31. The company paid a 22 cents per share dividend to shareholders on May 22 for the first quarter, one cent higher than the dividend paid in the fourth-quarter 2007. The current dividend yield is 4.40%, well above the industry average of 0.6%.