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Gatx (GATX) Up 10.6% 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 10.6% 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.
GATX Outperforms in Q4
The company’s earnings (excluding 46 cents from non-recurring items) of 84 cents per share outpaced the Zacks Consensus Estimate of 73 cents. Moreover, the bottom line improved 23.5% on a year-over-year basis.
Total revenues came in at $356.4 million, beating the Zacks Consensus Estimate of $351.6 million. Moreover, the top line inched up 1% on a year-over-year basis.
Segmental Performance
Profits in the Rail North America segment increased to $66.6 million from $61.2 million a year ago. The upside can be attributed to higher remarketing income and lower railcar maintenance expenses. The renewal lease rate change of the company’s Lease Price Index (LPI) was -0.9% in the fourth quarter. Additionally, average lease renewal term for cars included in the LPI was 43 months compared with 36 months in the year-ago quarter.
Rail North America’s wholly-owned fleet had approximately 122,000 railcars at the end of the reported quarter. Fleet utilization came in at 99.4% compared with 98.2% at the end of 2017.
In the quarter under review, profits in the Rail International segment declined approximately 13.9% year over year to $16.1 million. Results were hurt by expenses related to the closure of GATX Rail Europe’s (GRE) railcar maintenance facility in Germany.
Moreover, GRE’s fleet totaled approximately 23,000 railcars at the end of 2018. Fleet utilization was 98.8% compared with 96.8% at the end of 2017.
In the Portfolio Management unit, profits plunged 51.1% to $4.4 million. Performance in the segment was hurt by lower remarketing income at the Rolls Royce and Partner Finance affiliates (RRPF).
Profits in the American Steamship segment surged more than 100% to $12.3 million in the quarter under discussion. Results were driven by strong demand, improved operational efficiency and favorable operating conditions.
Liquidity
The company exited 2018 with cash and cash equivalents of $100.2 million compared with $296.5 million at the end of 2017. Restricted cash was $6.5 million compared with $3.2 million at the end of the previous year.
Share Repurchases
In the quarter under review, GATX repurchased around 1.5 million shares for approximately $115 million. As of Dec 31, 2018, the company had around $135 million remaining under its buyback program.
2019 Outlook
GATX anticipates full-year earnings per share (including a net negative non-cash impact of $4 million as a result of the adoption of new lease accounting standard effective in 2019) in the range of $4.85-$5.15.
Net income is expected to decline in the range of $15 million-$20 million from the 2018 figure. Furthermore, segmental profit at Rail North America is estimated to be around $40 million-$50 million less than the 2018 level.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -9.99% due to these changes.
VGM Scores
At this time, Gatx has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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
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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Gatx (GATX) Up 10.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Gatx (GATX - Free Report) . Shares have added about 10.6% 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.
GATX Outperforms in Q4
The company’s earnings (excluding 46 cents from non-recurring items) of 84 cents per share outpaced the Zacks Consensus Estimate of 73 cents. Moreover, the bottom line improved 23.5% on a year-over-year basis.
Total revenues came in at $356.4 million, beating the Zacks Consensus Estimate of $351.6 million. Moreover, the top line inched up 1% on a year-over-year basis.
Segmental Performance
Profits in the Rail North America segment increased to $66.6 million from $61.2 million a year ago. The upside can be attributed to higher remarketing income and lower railcar maintenance expenses. The renewal lease rate change of the company’s Lease Price Index (LPI) was -0.9% in the fourth quarter. Additionally, average lease renewal term for cars included in the LPI was 43 months compared with 36 months in the year-ago quarter.
Rail North America’s wholly-owned fleet had approximately 122,000 railcars at the end of the reported quarter. Fleet utilization came in at 99.4% compared with 98.2% at the end of 2017.
In the quarter under review, profits in the Rail International segment declined approximately 13.9% year over year to $16.1 million. Results were hurt by expenses related to the closure of GATX Rail Europe’s (GRE) railcar maintenance facility in Germany.
Moreover, GRE’s fleet totaled approximately 23,000 railcars at the end of 2018. Fleet utilization was 98.8% compared with 96.8% at the end of 2017.
In the Portfolio Management unit, profits plunged 51.1% to $4.4 million. Performance in the segment was hurt by lower remarketing income at the Rolls Royce and Partner Finance affiliates (RRPF).
Profits in the American Steamship segment surged more than 100% to $12.3 million in the quarter under discussion. Results were driven by strong demand, improved operational efficiency and favorable operating conditions.
Liquidity
The company exited 2018 with cash and cash equivalents of $100.2 million compared with $296.5 million at the end of 2017. Restricted cash was $6.5 million compared with $3.2 million at the end of the previous year.
Share Repurchases
In the quarter under review, GATX repurchased around 1.5 million shares for approximately $115 million. As of Dec 31, 2018, the company had around $135 million remaining under its buyback program.
2019 Outlook
GATX anticipates full-year earnings per share (including a net negative non-cash impact of $4 million as a result of the adoption of new lease accounting standard effective in 2019) in the range of $4.85-$5.15.
Net income is expected to decline in the range of $15 million-$20 million from the 2018 figure. Furthermore, segmental profit at Rail North America is estimated to be around $40 million-$50 million less than the 2018 level.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -9.99% due to these changes.
VGM Scores
At this time, Gatx has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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
Gatx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.