GATX Corporation (GATX - Free Report) is being aided by solid North American railcar leasing market and shareholder-friendly measures. However, high debt is worrisome.
Factors Favoring GATX
GATX holds an impressive record for paying regular dividends since 1919. In January 2023, the company raised its quarterly dividend by 5.8% to 55 cents per share. Its commitment to reward shareholders despite COVID-19-related disruptions is encouraging. Notably, 2023 marks the 105th consecutive year of GATX paying out dividend.
The gradual improvement in the North American railcar leasing market is a huge positive for GATX. Management expects this recovery to continue throughout 2023. Rail International’s 2023 segment profit is likely to rise as solid demand for new and existing railcars continues in Europe and India.
Key Risks
GATX is a highly leveraged company. Its current debt-to-equity ratio (in terms of percentage) is above 300%. A high debt-to-equity ratio does not bode well and is risky as it implies that the company is aggressively financing its growth with debt.
Zacks Rank & Key Picks
Currently, GATX carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently sports a Zacks Rank #1(Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 669% and 65% growth, respectively, on a year-over-year basis.
Allegiant, currently carrying a Zacks Rank #2 (Buy), also benefits from buoyant air-travel demand. With air-travel demand rising in the United States, operating revenues improved 8.5% year over year in 2022.
Management expects revenues to remain strong in 2023 as well. In first-quarter 2023, operating revenues increased 29.9% on a year-over-year basis. For second-quarter and full-year 2023, ALGT’s earnings are estimated to rise 328% and 182%, respectively, on a year-over-year basis.
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GATX Corporation (GATX - Free Report) is being aided by solid North American railcar leasing market and shareholder-friendly measures. However, high debt is worrisome.
Factors Favoring GATX
GATX holds an impressive record for paying regular dividends since 1919. In January 2023, the company raised its quarterly dividend by 5.8% to 55 cents per share. Its commitment to reward shareholders despite COVID-19-related disruptions is encouraging. Notably, 2023 marks the 105th consecutive year of GATX paying out dividend.
The gradual improvement in the North American railcar leasing market is a huge positive for GATX. Management expects this recovery to continue throughout 2023. Rail International’s 2023 segment profit is likely to rise as solid demand for new and existing railcars continues in Europe and India.
Key Risks
GATX is a highly leveraged company. Its current debt-to-equity ratio (in terms of percentage) is above 300%. A high debt-to-equity ratio does not bode well and is risky as it implies that the company is aggressively financing its growth with debt.
Zacks Rank & Key Picks
Currently, GATX carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently sports a Zacks Rank #1(Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 669% and 65% growth, respectively, on a year-over-year basis.
Allegiant, currently carrying a Zacks Rank #2 (Buy), also benefits from buoyant air-travel demand. With air-travel demand rising in the United States, operating revenues improved 8.5% year over year in 2022.
Management expects revenues to remain strong in 2023 as well. In first-quarter 2023, operating revenues increased 29.9% on a year-over-year basis. For second-quarter and full-year 2023, ALGT’s earnings are estimated to rise 328% and 182%, respectively, on a year-over-year basis.
4 Oil Stocks with Massive Upsides
Global demand for oil is through the roof... and oil producers are struggling to keep up. So even though oil prices are well off their recent highs, you can expect big profits from the companies that supply the world with "black gold."
Zacks Investment Research has just released an urgent special report to help you bank on this trend.
In Oil Market on Fire, you'll discover 4 unexpected oil and gas stocks positioned for big gains in the coming weeks and months. You don't want to miss these recommendations.
Download your free report now to see them.
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