It has been about a month since the last earnings report for GATX Corporation (NYSE:GATX) . Shares have lost about 3.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted 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.
Second Quarter Earnings
GATX Corporation's earnings (on an adjusted basis) of $1.32 per share surpassed the Zacks Consensus Estimate of $1.10. Revenues of $348.8 million fell short of the Zacks Consensus Estimate of $360.7 million. However, both earnings and revenues declined year over year, reflecting challenging market conditions. While the bottom line contracted 11.41%, revenues declined 2.93%. The company still expects 2017 earnings per share in the band of $4.40–$4.60.
Segment-Wise Results
Profits at the Rail North America segment were $74.9 million compared with $76.8 million, reported a year ago. This downside was mainly due to lower lease revenues and higher maintenance costs. During the reported quarter, GATX Corp.’s Lease Price Index (LPI) plunged 21.4% compared with a reduction of 25.4% in the second quarter of 2016. The metric declined 32.6% in the previous quarter. Furthermore, average lease renewal term for cars included in the LPI was 32 months in the reported quarter compared with 34 months in the year-ago quarter.
Rail North America’s wholly owned fleet had approximately 121,000 railcars at the end of the second quarter. Fleet utilization came in at 98.8%, marginally up from the year-ago quarter.
Profits at the Rail International segment rallied 27.7% year over year to $16.6 million. This upside was driven by lower maintenance expenses. Also, GATX Rail Europe’s fleet totaled approximately 23,000 cars at the end of the reported quarter. Fleet utilization was 95.7% compared with 94.8%at the end of the second quarter of 2016.
Profits at the Portfolio Management unit were $19.8 million in the discussed quarter, significantly down from the year-ago figure of $36.5 million. The American Steamship segment’s profit of $6.5 million in the second quarter compared favorably with the year-ago profit of $4.2 million.
Liquidity
GATX exited the quarter with cash and cash equivalents of $284.3 million compared with $307.5 million at the end of 2016. Restricted cash was $3.7 million compared with $3.6 million at the end of 2016.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, GATX's stock 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our style scores.
Outlook
Notably, the stock has a Zacks Rank #2 (Buy). We expect above average returns from the stock in the next few months.
GATX Corporation (GATX): Free Stock Analysis Report
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