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Gatx (GATX) Up 8.7% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Gatx (GATX - Free Report) . Shares have added about 8.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Q3 Earnings Beat at GATX

The company’s earnings of $1.22 per share surpassed the Zacks Consensus Estimate of $1.05. However, the bottom line dipped 2.4% year over year.

Revenues came in at $349.7 million, falling short of the Zacks Consensus Estimate of $356.4 million. Moreover, the top line slid 2.8% on a year-over-year basis.

Segment-Wise Results

Profits at the Rail North America segment decreased to $68.2 million from $70.2 million a year ago. This downside was primarily due to lower segmental revenues. The renewal lease rate change of the company’s Lease Price Index (LPI) was -11.5% in the third quarter. Additionally, average lease renewal term for cars included in the LPI was 33 months compared with 35 in the year-ago quarter.

Rail North America’s wholly-owned fleet had approximately119,000 railcars at the end of the reported quarter. Fleet utilization came in at 99.2% compared with 98.5% at the end of the year-ago period.

In the quarter under review, profits at the Rail International segment increased approximately 3% year over year to $20.7 million. Results were driven by a rise in railcars on lease and favorable movements related to foreign exchange.

Moreover, GATX Rail Europe’s fleet totaled approximately 23,000 railcars at the end of the third quarter. Fleet utilization was 98.4% compared with 95.6% at the end of third-quarter 2017.

At the Portfolio Management unit, profits plunged around 30% to $9 million. Segmental performances were hurt by lower residual sharing fees and lower marine operating results. Also, the American Steamship segment's profit slipped 1.7% to $11.9 million in the quarter under discussion due to reduction in tonnage transported.

Liquidity

The company exited the third quarter with cash and cash equivalents of $254.5 million compared with $296.5 million at 2017 end. Restricted cash was $4.1 million compared with $3.2 million at the end of the previous year.




2018 EPS View Intact

The company continues to expect full-year earnings per share (excluding the effect of tax adjustments and other items) in the range of $4.90-$5.10.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted -15.81% due to these changes.

VGM Scores

At this time, Gatx has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Gatx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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