Just made sure that RAIL actually has the manufacturing capacity for 10K++ car deliveries per year, which they likely need to support a PPS in the mid $40's. Good news. It's somewhere between 15K and 22.5K cars per year, which would be good enough for me.
That's what their March 2014 Investor Presentation says.
Three manufacturing plants:
– Roanoke, VA
– Cherokee, AL (Shoals)
– Danville, IL
Annual production capacity of 5,000 - 7,500 railcars per plant
What's interesting in this article is GBX's average price per car of $95K. As of Q2/14, RAIL's average price per car in the backlog is ~$82K. Will also get higher as they continue to diversify into different car types. An announcement of tank cars would sure help ....
"... The company noted that average sales price of $95,000 reflects the diversity of railcar types ordered. ..."
Read more: http://www.nasdaq.com/article/greenbrier-receives-orders-for-15000-railcars-worth-137-bln-20140917-00368#ixzz3DbD9cQdA
Oh my ..... imagine if RAIL gets such an order in Q3 .... to da moon :) .... at least it shows the industry growth seems to remain stable ....
Interesting piece of information as to gross margin of new cars vs. rebuilds. In their Q2/13 CC, McNeely mentioned that the gross margin of rebuilds and new cars is similar. Something to keep in mind.
From Q2/13 CC:
Sal Vitale - Sterne, Agee & Leach
Okay. And then just turning back to the rebuilt cars, you mentioned earlier that we should expect the revenue per car to be about two-thirds of the ASP for similar new cars. I think you've said in the past that we should be modeling that the gross margin percentage should be about the same as for a new car. Is that still current?
Joseph E. McNeely - President and COO
Yeah, that's what we said. We expect our margin percentage on rebuilds to be in line with new cars.
That's another interesting statement in their Q3/13 CC as to gross margin. It says that without one-time costs, gross margin was at 12.5% at that time. If RAIL could make a case in their Q3/14 CC that a 12.5% gross margin is what we can expect as we go forward ..... we'll likely stare at a PPS above $45.
McNeely's comment indicating a correlation of gross margin with "the mix of different car types" is very interesting .... the mix of car types seems to have changed significantly in their backlog. In a previous post, I mentioned that the average car value in their backlog increased from $67K to $82K over the past few Qs.
From Q3/13 CC:
Okay, that’s helpful. And you know from the margin expansion that we saw in this quarter, if you take out the one-time carrying costs it looks like gross margins were actually 12.5% and I was just wondering if will this mainly a result of the positive mix or just if you could elaborate on that?
It really comes down to the mix of the different car types that we did once you take out those carrying cost.
So, as we skyrocketed from the low $20's into the mid-$35's within two months, we have reached a point where RAIL has to deliver good results on railcar shipments and great guidance on backlog replenishment, in order to sustain this PPS past Q3/14. The next leg up into the mid $40'scan only happen through significant improvements in gross margin. So, the question is why their gross margin of 7.9% is still so pathetic in comparison to its major competitors. I'd like to see the gross margin climb up to 15% .... is that realistic? Trying to find information.
In Q2/14 CC, the CFO did indicate slight improvements in gross margin in Q3/14, but mostly due to the reduction of one-off items. But at the end of the following statement he also indicated that with increase volume we should also see improvements in gross margin. That really has to happen.
Mike Baudendistel - Stifel
Okay. And then, when I look at margin in the second quarter, I mean nice improvement there, absent the cost that you discussed for startup, is there any reason to think that those gross margins would not improve sequentially from the second quarter into the third quarter and fourth quarter given that your expected volumes should be higher?
Chip Avery - Chief Financial Officer
Yes. This is Chip. So there should be a bit of an improvement, certainly the – sort of the items that I identified, the warranty expense that we took in the quarter and the startup costs, as you said are weighing down as well as some of the startup at Shoals and the ramp up cost. So again, we don’t comment on guidance and margins and so on, but safe to say with the pickup in volume, we should see good strength there.
"... As of late, it has definitely been a great time to be an investor in FreightCar America Inc. (RAIL). The stock has moved higher by 29.3% in the past month, while it is also above its 20 Day SMA too. This combination of strong price performance and favorable technical, could suggest that the stock may be on the right path.
We certainly think that this might be the case, particularly if you consider RAIL’s recent earnings estimate revision activity. From this look, the company’s future is quite favorable; as RAIL has earned itself a Zacks Rank #2 (Buy), meaning that its recent run may continue for a bit longer, and that this isn’t the top for the in-focus company. ...."
I think / hope so too .... but obviously not at the same pace as this skyrocketing 60% over the past 1 1/2 months ...
As we inch closer to $34, one thing is sure: if RAIL can't deliver on the items I mentioned in my post before on this thread, the fall will be pretty hard. But I am staying in. Industry outlook is good.
oh my oh my ....... and 19 hours later ........... we are in the 32's .............. RAIL 32.06 +0.86 (2.76%)
I know I am talking here to myself .......... but could this be a $90 stock? ....... Think about it.
- $1 billion in revenues
- 15% gross margin
- $40 million in OPEX
- 35% tax
- 15 P/E forward multiple
and that'll be .... $90 ....
TheStreet are morons .... but thanks anyway
TheStreet upgraded shares of FreightCar America (NASDAQ:RAIL) to a buy rating in a research note released on Thursday morning.
Shares of FreightCar America (NASDAQ:RAIL) opened at 29.79 on Thursday. FreightCar America has a 52-week low of $17.53 and a 52-week high of $30.48. The stock has a 50-day moving average of $25.07 and a 200-day moving average of $24.91. The company’s market cap is $359.5 million.
FreightCar America (NASDAQ:RAIL) last announced its earnings results on Wednesday, August 6th. The company reported $0.13 earnings per share for the quarter, beating the analysts’ consensus estimate of $0.01 by $0.12. On average, analysts predict that FreightCar America will post $0.55 earnings per share for the current fiscal year.
In other FreightCar America news, Director S Carl Soderstrom, Jr. sold 1,519 shares of the stock on the open market in a transaction that occurred on Tuesday, August 26th. The shares were sold at an average price of $29.80, for a total transaction of $45,266.20. The sale was disclosed in a filing with the SEC, which can be accessed through this link.
FreightCar America, Inc (NASDAQ:RAIL) is engaged in manufacturing of aluminum-bodied railcars in North America.
.... but now we start trading at a whole different zip code than 3 weeks ago. To maintain this PPS, RAIL will have to deliver in Q3:
(1) gross margin _at least_ 9%
(2) deliver _at least_ 2200 cars
(3) _at least_ replenish the backlog
(4) positive outlook of the industry
.... all doable. And if one or two items are beyond above expectations, we can start flirting with $35's. I'll wait for Q3.
Nothing new, but Zacks investor note summarizes how I think about this stock. Based on Q2's gross margin of 7.9%, RAIL seems to be priced fair at this time, but if they can get their gross margin between 10% and 15%, like their major competition, RAIL's PPS will reflect a 30%++ gain immediately. There's the opportunity for Q3/14..
One stock that might be an intriguing choice for investors right now is FreightCar America Inc. (RAIL). This is because this security in the railroads space is seeing solid earnings estimate revision activity, and is in great company from a Zacks Industry Rank perspective.
This is important because, often times, a rising tide will lift all boats in an industry, as there can be broad trends taking place in a segment that are boosting securities across the board. This is arguably taking place in the railroads space as it currently has a Zacks Industry Rank of 13 out of more than 250 industries, suggesting it is well-positioned from this perspective, especially when compared to other segments out there.
Meanwhile, FreightCar America is actually looking pretty good on its own too. The firm has seen solid earnings estimate revision activity over the past month, suggesting analysts are becoming a bit more bullish on the firm’s prospects in both the short and long term.
In fact, over the past month, current quarter estimates have risen from 48 cents per share to 49 cents per share, while current year estimates have risen from 45 cents per share to 67 cents per share. This has helped RAIL to earn a Zacks Rank #2 (Buy), further underscoring the company’s solid position.
Just trying to figure out CAPEX projections of RAIL's major customers. Norfolk is historically one of RAILs top three customers . They've announced in the Q2/14 CC heavy CAPEX in 2015 and subsequent years to purchase freight cars. Bodes well for RAIL..
Norfolk Q2/14 CC:
We have been forecasting for the next two or three years, we're going to have heavy capital spending as we have some freight car purchases that are going to be timed in the next couple of years.
Norfolk Q2/14 CC:
Well, you’re correct that that’s above of what our historical norm, where we run cash. 2015 will have the heavy CapEx. We also hope that it’s going to have the very strong free cash flow, which will support that. And so I think what we are trying to do is just maintain our discipline, keep an eye on the market and be ready to take advantage of any volatility that arises.
Were there any talks / insinuations in past CCs, press releases, or analyst reports that RAIL might move into tanker cars as well.
Analysts are certainly bullish ... right now the 2015 EPS consensus stands at $ 1.76. If they pump it into the $ 2's, we should see the $30s prior to Q3 earnings.
A $2 EPS in 2015 is certainly possible, but RAIL has to improve on their gross margin. I don't know why RAIL's gross margin has been much lower than its competition in the past. RAIL worked at a gross margin of 7.9% in Q2/14; GBX (Greenbrier) gross margin lies between 11% and 15%; and ARII's (American Railcar Industries) gross margin between 20% and 25%.
Given the improved quality of RAIL's backlog - average price per railcar in RAIL's backlog jumped from $67 K to $ 83 K over the last few Qs - I hope they can improve significantly on their 2015 gross margin and move it beyond 10%, which would imply revenues of ~$ 752 M to support a $2 EPS.
(($2 EPS * 12.1 million shares / (1-35% tax) + ~$2 M post OPEX costs + $36 M. OPEX) / 0.1 gross margin == $ 752 M of revenues
RAIL valued its Q2/14 backlog at $ 706 million, so $ 752 M of revenues in 2015 at a gross margin of 10% is certainly in the cards, and we'd likely stare at a PPS way in the $30s .... I think :)