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Can Value Investors Consider GATX Corporation (GATX) Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put GATX Corporation (GATX - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, GATX Corporation has a trailing twelve months PE ratio of 17.37, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 18.28. However, if we focus on the long-term PE trend, GATX Corporation’s current PE level puts it quite above its midpoint of 11.51over the past five years.
The stock’s PE however compares unfavorably with the Transportation Market’s trailing twelve months PE ratio, which stands at 15.74. This indicates that the stock is overvalued right now, compared to its peers.
Meanwhile, GATX Corporation has a forward PE ratio (price relative to this year’s earnings) of 15.4, which is lower than the current level. So, it is fair to say that a slightly more value-oriented path may be ahead for stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, GATX Corporation has a P/S ratio of 2.04. This is lower than the S&P 500 average, which comes in at 3.31x right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, GATX Corporation currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes GATX Corporation a solid choice for value investors.
What About the Stock Overall?
Though GATX Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of D and a Momentum Score of F. This gives GATX a Zacks VGM score — or its overarching fundamental grade — of D. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen no upward or downward revisions over the past sixty days, while the current-year estimates have seen one upward revision and no downward revisions in the past sixty days.
This has had a positive impact on the consensus estimate as the current-quarter consensus estimate has remained stable over the past two months, while the current-year estimate has inched up 0.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Such favorable analyst sentiments is the reason why the stock has a Zacks Rank #2 (Buy) and it is the reason why we are looking for outperformance from the company in the near term.
Bottom Line
GATX Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (among Top 13% of more than 250 industries) and a Zacks Rank #2, instils investors’ optimism in the stock.
However, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
We believe, despite an unsatisfactory past industry performance, a good Zacks and industry rank and favorable analyst sentiments signal that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this robust value metrics, and we believe that we have a strong value contender in GATX.
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Image: Bigstock
Can Value Investors Consider GATX Corporation (GATX) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put GATX Corporation (GATX - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, GATX Corporation has a trailing twelve months PE ratio of 17.37, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 18.28. However, if we focus on the long-term PE trend, GATX Corporation’s current PE level puts it quite above its midpoint of 11.51over the past five years.
The stock’s PE however compares unfavorably with the Transportation Market’s trailing twelve months PE ratio, which stands at 15.74. This indicates that the stock is overvalued right now, compared to its peers.
Meanwhile, GATX Corporation has a forward PE ratio (price relative to this year’s earnings) of 15.4, which is lower than the current level. So, it is fair to say that a slightly more value-oriented path may be ahead for stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, GATX Corporation has a P/S ratio of 2.04. This is lower than the S&P 500 average, which comes in at 3.31x right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, GATX Corporation currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes GATX Corporation a solid choice for value investors.
What About the Stock Overall?
Though GATX Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of D and a Momentum Score of F. This gives GATX a Zacks VGM score — or its overarching fundamental grade — of D. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen no upward or downward revisions over the past sixty days, while the current-year estimates have seen one upward revision and no downward revisions in the past sixty days.
This has had a positive impact on the consensus estimate as the current-quarter consensus estimate has remained stable over the past two months, while the current-year estimate has inched up 0.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
GATX Corporation Price and Consensus
GATX Corporation price-consensus-chart | GATX Corporation Quote
Such favorable analyst sentiments is the reason why the stock has a Zacks Rank #2 (Buy) and it is the reason why we are looking for outperformance from the company in the near term.
Bottom Line
GATX Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (among Top 13% of more than 250 industries) and a Zacks Rank #2, instils investors’ optimism in the stock.
However, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
We believe, despite an unsatisfactory past industry performance, a good Zacks and industry rank and favorable analyst sentiments signal that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this robust value metrics, and we believe that we have a strong value contender in GATX.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>