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6 Reasons Why Investors Should Add GATX to Their Portfolio

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GATX Corporation (GATX - Free Report) is benefiting from its shareholder-friendly initiatives through which it rewards its shareholders in the form of dividend payments and share repurchases.

Against this backdrop, let’s look at the factors that make this stock an attractive pick.

What Makes GATX an Attractive Pick?

An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse year to date. Shares of GATX have gained 12.8% so far this year, outperforming the 10.2% rise of the industry it belongs to.

Zacks Investment Research
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Solid Zacks Rank: GATX has a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. Thus, the company is a compelling investment proposition at the moment.

Northward Estimate Revisions:The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 90 days, the Zacks Consensus Estimate for GATX’s third-quarter 2023 earnings has moved up 4.1% year over year. Over the past 90 days, the Zacks Consensus Estimate for GATX’s 2023 earnings has moved up 2.1% year over year.

Positive Earnings Surprise History: GATX has an impressive earnings surprise history. The company delivered an earnings surprise of 17.30% in the last four quarters, on average. 

Earnings Expectations: Earnings growth and stock price gains often indicate a company’s prospects. For third-quarter 2023, GATX’s earnings are expected to grow 36.61% year over year. For 2023 and 2024, GATX’s earnings are expected to grow 14.33% and 1.10%, year over year, respectively.

Growth Factors:The gradual improvement in the North American railcar leasing market is a huge positive for GATX. In the second quarter of 2023, profits in the Rail North American segment increased to $79.3 million from $53.1 million a year ago, primarily due to higher lease revenues and higher gains on asset dispositions.  Management expects recovery in the North American railcar leasing market 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. 

In the second quarter of 2023, the Portfolio Management unit reported a segmental profit of $26.6 million against a segmental loss of $15.7 million in the year-ago quarter. Results were driven primarily by increased earnings from the Rolls-Royce and Partners Finance affiliates and GATX Engine Leasing.

We are upbeat about GATX's measures to reward its shareholders through dividends and buybacks. In January 2023, the company raised its quarterly dividend by 5.8% to 55 cents per share. Its commitment to reward shareholders despite coronavirus-related disruptions is encouraging. Notably, 2023 marks the 105th consecutive year of GATX paying out dividends.  

Other Stocks to Consider

Some other top-ranked stocks for investors interested in the Zacks Transportation sector are United Airlines (UAL - Free Report) and SkyWest, Inc. (SKYW - Free Report) . United Airlines presently sports a Zacks Rank #1, while SkyWest currently carries a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank stocks here.

United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 21.44%, on average.

The Zacks Consensus Estimate for UAL’s current-year earnings has improved 18.9% over the past 90 days. Shares of UAL have soared 34.5% year to date.

SkyWest's fleet-modernization efforts are commendable. A fall in operating expenses is a tailwind for SkyWest. In second-quarter 2023, the metric dipped 2.4% to $693.8 million due to a decline in operating costs. Low operating expenses boost bottom-line results. Shares of SKYW have surged 144.6% year to date.

SKYW delivered a trailing four-quarter earnings surprise of 31.51%, on average.

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