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Genesee & Wyoming (GWR) Stock Up 26% in 6 Months: Here's Why

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Genesee & Wyoming Inc. (GWR - Free Report) has been performing impressively of late. Evidently, the stock has gained 25.9% in the past six months, outperforming its industry’s 21.8% rally.


Reasons Behind the Outperformance

Genesee & Wyoming performed very well in the second quarter of 2018, results of which were announced last month. In the quarter, this Darien, CT-based railroad operator reported better-than-expected earnings and revenues. Both the metrics also improved substantially on a year-over-year basis. A low effective tax rate aided results. Geographically, operating revenues from North American, Australian and U.K./European operations increased 7.6%, 2.9% and 19.2%, respectively. 

Backed by huge tax savings and other positives, Genesee & Wyoming expects 2018 adjusted earnings per share to be between $3.80 and $3.90, much higher than $2.91 reported in 2017. The Zacks Consensus Estimate for current-year earnings stands at $3.87, well within the company’s guided range. Moreover, the measure has been revised 0.5% upward over the last 60 days.

Genesee & Wyoming‘s efforts to reward shareholders are impressive as well. To this end, the company initiated a repurchase program worth $300 million. The program is expected to be completed by the year end. The company has repurchased approximately 2.1 million shares for $150 million at the end of April 2018.

Furthermore, the company’s  impressive adjusted free cash flow generation has been part of its shareholder-friendly moves. Adjusted free cash flow (attributable to the company excluding new business investments and grant funded projects) increased to $270 million in 2017 from $68 million in 2008. The metric is expected to increase further to $370 million at the end of 2018.

Zacks Rank & Key Picks

Genesee & Wyoming carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. (SKYW - Free Report) , CSX Corporation (CSX - Free Report) and Norfolk Southern Corporation (NSC - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of SkyWest, CSX and Norfolk have surged more than 17%, 37% and 27%, respectively, over the past six months.

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