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Genesee & Wyoming (GWR) Q2 Earnings Beat Estimates, Up Y/Y
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Genesee & Wyoming Inc.’s second-quarter earnings (excluding 21 cents from non-recurring items) of 94 cents per share surpassed the Zacks Consensus Estimate by 2 cents. The bottom line also increased 17.5% on a year-over-year basis. Results were aided by higher revenues and lower effective tax rate.
Operating revenues increased 10.1% year over year to $595 million, which outpaced the Zacks Consensus Estimate of $588.2 million. Freight revenues accounted for bulk of the top line (70.3%) and increased 9.2% to $418.2 million. Meanwhile, freight-related revenues contributed 23.9% to the top line and increased 11.8% to $142.4 million. The balance came from ‘other revenues’.
Total operating expenses (on a reported basis) increased 11.6% to $491.9 million mainly owing to higher labor-related costs. Operating income (on a reported basis) was up 3.4% to $103.1 million in the quarter. The metric, on an adjusted basis, increased 1.1% to $107 million.
Traffic at Genesee & Wyoming increased 3% year over year to 834,363 carloads. During the first half of 2018, the company bought back approximately 2.7 million shares for $192 million.
Genesee & Wyoming, Inc. Price, Consensus and EPS Surprise
Geographically, operating revenues from North American, Australian and U.K./European operations increased 7.6%, 2.9% and 19.2%, respectively. Moreover, North American, Australian and U.K./European operations accounted for a respective 56.1%, 13.3% and 29.6% of the total operating revenues in the quarter. The North American unit exhibited the strongest carload growth (on a quarterly basis) since the first quarter of 2011.
Adjusted operating ratio (operating expenses as a percentage of revenues) at the company’s North American operations deteriorated 180 basis points to 76.1% in the second quarter. We note that lower the value of the metric the better. Adjusted operating ratio at its Australian operations also decreased approximately 170 basis points to 75.2% in the second quarter. However, the metric improved 50 basis points to 96.4%. On a consolidated basis, the metric stood at 82% compared with 80.4% a year ago.
Q3 Outlook
For the third quarter of 2018, operating revenues (consolidated) are envisioned between $580 million and $600 million. In the North American segment, the same is anticipated between $330 million and $340 million. Operating revenues is anticipated between $75 million and $80 million in Australia and $175-$180 million at the company’s U.K./European operations.
Earnings per share are expected to be in the $1.10-$1.20 range in the third quarter of 2018. The Zacks Consensus Estimate for earnings per share and revenues are pegged at $1.15 and $614.9 million, respectively. Operating ratio (excluding U.K. restructuring costs) is projected to lie between 78% and 79%. Effective tax rate is projected to be approximately 27%.
2018 Outlook
This Zacks Rank #2 (Buy) company expects earnings per share to lie between $3.80 and $3.90. Consolidated revenues are envisioned to be in the $2,335 million to $2,365 million band. The Zacks Consensus Estimate for earnings per share and revenues are pegged at $3.84 and $2,390 million, respectively. Adjusted operating ratio is projected to lie between 81% and 82%.
Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, namely C.H. Robinson Worldwide, Inc. (CHRW - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Air Lease Corp. (AL - Free Report) . While C.H. Robinson will report second-quarter earnings on Jul 31, Expeditors and Air Lease will release the same on Aug 7 and Aug 9, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Genesee & Wyoming (GWR) Q2 Earnings Beat Estimates, Up Y/Y
Genesee & Wyoming Inc.’s second-quarter earnings (excluding 21 cents from non-recurring items) of 94 cents per share surpassed the Zacks Consensus Estimate by 2 cents. The bottom line also increased 17.5% on a year-over-year basis. Results were aided by higher revenues and lower effective tax rate.
Operating revenues increased 10.1% year over year to $595 million, which outpaced the Zacks Consensus Estimate of $588.2 million. Freight revenues accounted for bulk of the top line (70.3%) and increased 9.2% to $418.2 million. Meanwhile, freight-related revenues contributed 23.9% to the top line and increased 11.8% to $142.4 million. The balance came from ‘other revenues’.
Total operating expenses (on a reported basis) increased 11.6% to $491.9 million mainly owing to higher labor-related costs. Operating income (on a reported basis) was up 3.4% to $103.1 million in the quarter. The metric, on an adjusted basis, increased 1.1% to $107 million.
Traffic at Genesee & Wyoming increased 3% year over year to 834,363 carloads. During the first half of 2018, the company bought back approximately 2.7 million shares for $192 million.
Genesee & Wyoming, Inc. Price, Consensus and EPS Surprise
Genesee & Wyoming, Inc. Price, Consensus and EPS Surprise | Genesee & Wyoming, Inc. Quote
Segmental Results
Geographically, operating revenues from North American, Australian and U.K./European operations increased 7.6%, 2.9% and 19.2%, respectively. Moreover, North American, Australian and U.K./European operations accounted for a respective 56.1%, 13.3% and 29.6% of the total operating revenues in the quarter. The North American unit exhibited the strongest carload growth (on a quarterly basis) since the first quarter of 2011.
Adjusted operating ratio (operating expenses as a percentage of revenues) at the company’s North American operations deteriorated 180 basis points to 76.1% in the second quarter. We note that lower the value of the metric the better. Adjusted operating ratio at its Australian operations also decreased approximately 170 basis points to 75.2% in the second quarter. However, the metric improved 50 basis points to 96.4%. On a consolidated basis, the metric stood at 82% compared with 80.4% a year ago.
Q3 Outlook
For the third quarter of 2018, operating revenues (consolidated) are envisioned between $580 million and $600 million. In the North American segment, the same is anticipated between $330 million and $340 million. Operating revenues is anticipated between $75 million and $80 million in Australia and $175-$180 million at the company’s U.K./European operations.
Earnings per share are expected to be in the $1.10-$1.20 range in the third quarter of 2018. The Zacks Consensus Estimate for earnings per share and revenues are pegged at $1.15 and $614.9 million, respectively. Operating ratio (excluding U.K. restructuring costs) is projected to lie between 78% and 79%. Effective tax rate is projected to be approximately 27%.
2018 Outlook
This Zacks Rank #2 (Buy) company expects earnings per share to lie between $3.80 and $3.90. Consolidated revenues are envisioned to be in the $2,335 million to $2,365 million band. The Zacks Consensus Estimate for earnings per share and revenues are pegged at $3.84 and $2,390 million, respectively. Adjusted operating ratio is projected to lie between 81% and 82%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, namely C.H. Robinson Worldwide, Inc. (CHRW - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Air Lease Corp. (AL - Free Report) . While C.H. Robinson will report second-quarter earnings on Jul 31, Expeditors and Air Lease will release the same on Aug 7 and Aug 9, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>