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GATX Stock Steady on the Bourses Since Q2 Earnings Miss

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Shares of GATX Corporation (GATX - Free Report) have been consistent in its position since second-quarter 2022 results were announced on Jul 21. Although GATX reported lower-than-expected earnings per share for the June quarter, its stock retained stability on the bourses, which could be attributed to its impressive earnings guidance for 2022.

What GATX Earnings Unveil

GATX’s second-quarter 2022 earnings (excluding $1.00 from non-recurring items) of $1.24 per share surpassed the Zacks Consensus Estimate of $1.07. The bottom line declined 20.7% year over year. The top line dipped 1.3% year over year to $312.7 million, mainly due to the 1% reduction in lease revenues (contributing 91.1% to the top line) to $284.9 million.

Marine operating revenues contributed 1.7% to the top line of GATX, currently carrying a Zacks Rank #3 (Hold), and increased to $5.2 million from $5.1 million a year ago. The rest came from other sources. Total expenses (on a reported basis) declined 5% to $230.9 million.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Profits in the Rail North America segment declined to $53.1 million from $77.6 million a year ago. The downside was primarily due to lower gains on asset dispositions. The renewal lease rate change of GATX’s Lease Price Index (LPI) was 18.3% in the reported quarter against the year-ago quarter’s -6.7%. The average lease renewal term for cars included in the LPI was 34 months compared with 29 months a year ago.

Rail North America’s wholly-owned fleet consisted of approximately 111,600 rail cars at the end of Jun 30, 2022. Fleet utilization was 99.4% compared with 98.5% at the end of second-quarter 2021.

In the Rail International segment, profits rose 3.6% year over year to $27.3 million in the second quarter. Results were primarily driven by more railcars on lease.

GATX Rail Europe’s fleet totaled around 27,200 rail cars at the end of the quarter. Fleet utilization was 99.9% in the reported quarter compared with 98.4% at the end of the second quarter of 2021.

The Portfolio Management unit reported a segmental loss of $15.7 million in the June quarter against a profit of $12.2 million in the year-ago quarter.

Driven by the strength in the global rail markets and a robust secondary market for railcars, GATX raised its 2022 earnings per share guidance to the $5.60-$6.00 range, excluding the impact of tax adjustments and other Items. The earlier guidance was in the $5.50-$5.80 range. The Zacks Consensus Estimate for the current-year earnings is presently pegged at $5.83, above the midpoint ($5.80) of the newly projected range.

Earnings Snapshots

Within the broader Transportation sector, J.B. Hunt Transport Services (JBHT - Free Report) , CSX Corporation (CSX - Free Report) and United Airlines (UAL - Free Report) recently reported second-quarter 2022 results.

J.B. Hunt reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

Quarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year. Total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. Total operating revenues, excluding fuel surcharges, rose 21.2% year over year.

Quarterly operating income (on a reported basis) climbed 46.2% to $353.08 million on higher volumes, customer rate and cost recovery efforts. Operating expenses escalated 30.6% to $3.48 billion.

CSX reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

Quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.

Total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $3,642.2 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge and contribution from the acquisition of Quality Carriers. Overall revenues per unit increased 27%.

United Airlines’ second-quarter 2022 earnings (excluding 43 cents from non-recurring items) of $1.43 per share fell short of the Zacks Consensus Estimate of $1.86. Escalated operating expenses induced the earnings miss.

The second quarter of 2022 was the first profitable period at UAL since the onset of the pandemic. Operating revenues at United Airlines came in at $12,112 million, beating the Zacks Consensus Estimate of $12,033.7 million.