Back to top

Image: Bigstock

GATX Corp's (GATX) Q4 Earnings & Sales Top; Shares Gain

Read MoreHide Full Article

GATX Corporation (GATX - Free Report) reported better-than-expected earnings per share and revenues in the fourth quarter of 2016. The railcar leasing company’s earnings (on an adjusted basis) of $1.14 per share comfortably surpassed the Zacks Consensus Estimate of $1.05.

Revenues of $362.1 million were above the Zacks Consensus Estimate of $359.8 million. Naturally, the top- and bottom-line outperformance found favor with investors. The stock gained in the trading session on Jan 19 to $59.12, up 3.34% from the closing price on Jan 18.

In fact, the company’s stock has been performing well for quite some time. The stock has outpaced the Zacks categorized Transportation - Equipment and Leasing industry over the last one year. The stock returned 55.8% compared with the industry’s gain of 15.3% over the same period.

However, in the fourth quarter both earnings and revenues declined on a year-over-year basis, reflecting the challenging market conditions. While the bottom line contracted 20.83%, revenues declined 4.4%.

Segment-Wise Results

Profits at the Rail North America segment declined to $48.5 million from $98.8 million a year ago. The downside was mainly due to lower revenues as fewer cars were on lease. During the reported quarter, GATX Corp.’s Lease Price Index (LPI) decreased 36.2% as against 20.5% increase in the same period last year. The metric declined 21.4% in the previous quarter. Furthermore, average lease renewal term for cars included in the LPI was 29 months in the reported quarter as against 43 months in the year-ago quarter.

GATX Corp. stated in its press release that Rail North America’s wholly owned fleet had approximately 122,000 rail cars at the end of 2016. Fleet utilization came in at 98.9% compared with 99.1% in the year-earlier quarter.

Profits at the Rail International segment improved 2.9% year over year to $14.1 million. GATX Rail Europe’s fleet totaled approximately 23,100 rail cars at the end of 2016. Fleet utilization was 95.6% compared with 95.8% at the end of the fourth quarter of 2015.

Profits at the Portfolio Management unit were $17.7 million in the quarter, down significantly from the year-ago figure of $40.9 million. Segmental profit was hurt by lower gains on asset dispositions, among other factors. The American Steamship segment's loss of $2.8 million in the fourth quarter compared unfavorably with the year-ago profit of $1.7 million.

Gatx Corp. Price, Consensus and EPS Surprise

 

Gatx Corp. Price, Consensus and EPS Surprise | Gatx Corp. Quote

Liquidity

GATX Corp. exited the year with cash and cash equivalents of $307.5 million compared with $202.4 million at the end of 2015. Restricted cash was $3.6 million compared with $17.3 million at the end of 2015.

 Outlook for 2017

The company expects 2017 earnings per share in the band of $4.40–$4.60. The Zacks Consensus Estimate of $4.50 is within the guided range.

Upcoming Releases

Investors interested in the transportation sector are keenly awaiting for fourth-quarter earnings reports from key players like Canadian National Railway Company (CNI - Free Report) , Norfolk Southern Corp. (NSC - Free Report) and Hawaiian Holdings, Inc. (HA - Free Report) in the coming days. Hawaiian Holdings and Canadian National are scheduled to report on Jan 24, while Norfolk Southern will report on Jan 25.

GATX Corp. currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>

Published in