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Why Is Gatx (GATX) Up 4.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Gatx (GATX - Free Report) . Shares have added about 4.2% 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 its most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at GATX in Q3

The company’s earnings of $1.25 per share surpassed the Zacks Consensus Estimate by 9 cents. The bottom line also expanded 2.5% from the year-ago figure. Results were aided by higher revenues.

Revenues came in at $360.7 million, which outpaced the Zacks Consensus Estimate of $352.5 million. The top line also increased on a year-over-year basis mainly owing to higher other revenues. Total expenses increased 3.1% to $273.5 million in the reported quarter.

GATX anticipates 2019 earnings to be at the high end of or slightly above the previously guided range of $4.85-$5.15 per share.
 

Segment-Wise Results

Profits at the Rail North America segment decreased to $60.9 million from $68.2 million a year ago. The decline was mainly due to higher maintenance expenses apart from lower gains on asset dispositions. The renewal lease rate change of the company’s Lease Price Index (LPI) was -7.7% in the reported quarter compared with -11.5% a year ago. Additionally, average lease renewal term for cars included in the LPI was 40 months compared with 33 months in the year-ago quarter. In fact, Rail North America’s wholly-owned fleet had approximately 119,000 rail cars at the end of the third quarter. Fleet utilization was flat at 99.2%.

At the Rail International segment, profits decreased 3.9% year over year to $19.9 million. Segmental profits were hurt by unfavorable movements related to foreign exchange and high maintenance costs.

Moreover, GATX Rail Europe’s fleet totaled approximately 24,000 rail cars at the end of third-quarter 2019. Fleet utilization was 99.4% compared with 98.4% at the end of third-quarter 2018.

At the Portfolio Management unit, profits increased 18.9% to $10.7 million driven by the Rolls-Royce and Partner Finance affiliates’ buoyant performance in the quarter under review. Moreover, the American Steamship segment's profit increased 1.7% to $12.1 million in the quarter under review.
 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, 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 A on the value side, putting it in the top 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

Gatx has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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