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With an improved economy and a stronger oil market, there was plenty of hope that companies in the railcar market could experience a much-needed rebound. However, that optimism hasn’t really been rewarded by the market, as the space is still facing some serious headwinds, and it doesn’t appear to be coming out of this malaise anytime soon.
In fact, the broader equipment and leasing segment of the transportation industry is ranked close to the bottom third for the Zacks Industry Rank, while the sector rank is in the bottom 10% overall too. Clearly, the improving economy hasn’t really had much of an impact on boosting the prospects for this industry, leaving investors in companies here in a rough spot.
While numerous companies in the industry are feeling the pain thanks to these trends, the weakness is especially true for FreightCar America (RAIL - Free Report) . This falling company could experience additional selling pressure in the months ahead, at least if we look to recent earnings estimates for guidance.
RAIL in Focus
FreightCar America is a manufacturer of freight cars, producing the cars at one of its three U.S. factories. The company’s cars are primarily used for bulk material transportation such as coal or other commodities, but also products such as automobiles too.
The company hasn’t been able to turn things around when it comes to earnings though, as it has missed estimates by an average of nearly 50% in the last four quarters. And with misses like those, analysts have punished the company with lower earnings expectations for the future too.
The most recent earnings estimates have been sharply lower for RAIL, and we actually haven’t seen any estimates move higher for the company in the past two months. Current estimates now peg the company at a loss for not just the current year, but the next year as well.
This slump has been pretty dramatic, as the current year consensus estimate has gone from 23 cents per share a week ago, to a loss of 12 cents per share today. And the most accurate estimate is far lower than that 12 cent loss figure, with the most accurate coming in at a 65 cent loss per share, a roughly 440% decline from the current consensus.
Freightcar America, Inc. Price, Consensus and EPS Surprise
Given these types of numbers, it doesn’t look like RAIL has the ability to turn things around anytime soon. No wonder the stock has a Zacks Rank #5 (Strong Sell), and why we are looking for more sluggish performance in the months ahead from this company too.
Other Picks
If investors are looking for other selections in this market, there are actually a couple of ‘buy’ ranked stocks that could be worth a closer look. One that may warrant some attention is CAI International , a freight container leasing and management company.
This stock has seen rising earnings estimates over the past month, while it has year-over-year growth projections in-excess of 150% for the current year time frame. Add in strong value and momentum scores, and this could be a much better choice for investors over RAIL, at least until FreightCar America can turn around its sluggish earnings momentum and move it in the right direction.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Image: Bigstock
Bear of the Day: FreightCar America (RAIL)
With an improved economy and a stronger oil market, there was plenty of hope that companies in the railcar market could experience a much-needed rebound. However, that optimism hasn’t really been rewarded by the market, as the space is still facing some serious headwinds, and it doesn’t appear to be coming out of this malaise anytime soon.
In fact, the broader equipment and leasing segment of the transportation industry is ranked close to the bottom third for the Zacks Industry Rank, while the sector rank is in the bottom 10% overall too. Clearly, the improving economy hasn’t really had much of an impact on boosting the prospects for this industry, leaving investors in companies here in a rough spot.
While numerous companies in the industry are feeling the pain thanks to these trends, the weakness is especially true for FreightCar America (RAIL - Free Report) . This falling company could experience additional selling pressure in the months ahead, at least if we look to recent earnings estimates for guidance.
RAIL in Focus
FreightCar America is a manufacturer of freight cars, producing the cars at one of its three U.S. factories. The company’s cars are primarily used for bulk material transportation such as coal or other commodities, but also products such as automobiles too.
The company hasn’t been able to turn things around when it comes to earnings though, as it has missed estimates by an average of nearly 50% in the last four quarters. And with misses like those, analysts have punished the company with lower earnings expectations for the future too.
The most recent earnings estimates have been sharply lower for RAIL, and we actually haven’t seen any estimates move higher for the company in the past two months. Current estimates now peg the company at a loss for not just the current year, but the next year as well.
This slump has been pretty dramatic, as the current year consensus estimate has gone from 23 cents per share a week ago, to a loss of 12 cents per share today. And the most accurate estimate is far lower than that 12 cent loss figure, with the most accurate coming in at a 65 cent loss per share, a roughly 440% decline from the current consensus.
Freightcar America, Inc. Price, Consensus and EPS Surprise
Freightcar America, Inc. Price, Consensus and EPS Surprise | Freightcar America, Inc. Quote
Given these types of numbers, it doesn’t look like RAIL has the ability to turn things around anytime soon. No wonder the stock has a Zacks Rank #5 (Strong Sell), and why we are looking for more sluggish performance in the months ahead from this company too.
Other Picks
If investors are looking for other selections in this market, there are actually a couple of ‘buy’ ranked stocks that could be worth a closer look. One that may warrant some attention is CAI International , a freight container leasing and management company.
This stock has seen rising earnings estimates over the past month, while it has year-over-year growth projections in-excess of 150% for the current year time frame. Add in strong value and momentum scores, and this could be a much better choice for investors over RAIL, at least until FreightCar America can turn around its sluggish earnings momentum and move it in the right direction.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Be among the very first to see them >>