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Gatx (GATX) Up 8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Gatx (GATX - Free Report) . Shares have added about 8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Gatx due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Earnings Miss at GATX in Q4

GATX's  earnings per share of 50 cents missed the Zacks Consensus Estimate of 86 cents. Moreover, the bottom line declined year over year primarily due to lower profitability in the Rail North America segment and below-par performance in the Portfolio Management unit.

Total revenues were $304.9 million in the reported quarter. Bulk of the top line (89.9%) came from lease revenues. Marine operating revenues contributed 1.3% to the top line. The balance came from other sources. Meanwhile, total expenses (on a reported basis) dropped 3.2% to $231.3 million.

Segmental Results

Profits in the Rail North America segment declined to $49.5 million in the fourth quarter from the prior-year quarter’s level of $61.1 million. The downside was primarily caused by lower gains on asset dispositions in the quarter. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was -22.6% in the reported quarter compared with the year-ago quarter’s -9.1%. Additionally, average lease renewal term for cars included in the LPI was 34 months compared with 37 months in the year-ago quarter.

In fact, Rail North America’s wholly-owned fleet had approximately 118,100 rail cars at the end of Dec 31, 2020. Fleet utilization was 98.1% compared with 99.3% at the end of fourth-quarter 2019.

Meanwhile, in the Rail International segment, profits rose to $25.6 million in the fourth quarter from the prior-year quarter’s level of $22.9 million. Results were driven by more railcars on lease.

Also, GATX Rail Europe’s fleet totaled 26,350 rail cars at the end of the quarter. Fleet utilization was 98.1% compared with 99.3% at the end of fourth-quarter 2019.

The Portfolio Management unit reported segmental loss of $5.7 million in the December-end quarter against the segmental profit of $27.5 million in fourth-quarter 2019. The deterioration was primarily due to the performance at the Rolls-Royce and Partners Finance affiliates.

Liquidity

GATX exited the fourth quarter with cash and cash equivalents of $292.2 million compared with $151 million at the end of 2019.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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