GATX Corp (GATX) Stock Up on Q2 Earnings Beat, Raised View
GATX Corporation GATX performed impressively in the second quarter of 2016, reporting higher-than-expected earnings. The railcar leasing company’s earnings (on an adjusted basis) came in at $1.49 per share, well ahead of the Zacks Consensus Estimate of $1.24. Moreover, earnings improved 44.7% from the year-ago figure.
The stock has gained almost 2.9% following the stellar quarterly performance.
Meanwhile, the top line declined 1.8% in the second quarter of 2016 to $358.9 million due to lower Marine operations revenues, which more than offset gains in Lease and Other revenues.
Segment-wise Results
Profits at the Rail North America segment declined to $76.8 million from $84.9 million in the second quarter of 2015. The downside was mainly due to lower gains on asset dispositions, marginally offset by higher average lease rates for railcars in the reported segment.
During the reported quarter, GATX’s Lease Price Index (LPI) decreased 25.4% in the second quarter compared to the 36.3% increase in the same period last year. The comparable figure in the first quarter of 2016 was an increase of 6.4%. Furthermore, the average lease renewal term for cars included in the LPI was 34 months versus 54 months in the comparable quarter last year.
GATX stated in its press release that Rail North America’s wholly owned fleet had approximately 124,000 rail cars at the end of the second quarter of 2016. Fleet utilization came in at 98.1% as compared with 99.3% in the year-earlier quarter. Additionally, investments in this segment amounted to $145.4 million.
Profits at the Rail International segment declined 31.9% year over year to $13 million. GATX Rail Europe’s fleet totaled approximately 23,000 cars at the end of the reported quarter. Fleet utilization was 94.8% versus 95.1% at the end of the second quarter of 2015.
Profits at the Portfolio Management unit improved from $10.3 million in the second quarter of 2015 to $36.5 million in the second quarter of 2016. The American Steamship segment recorded profits of $4.2 million in the second quarter compared with the year-ago figure of $2.9 million.
Liquidity
GATX exited the quarter with cash and cash equivalents of $177.6 million compared with $202.4 million at the end of 2015. Restricted cash was $11.9 million as compared with $17.3 million at the end of Dec 2015.
GATX CORP Price, Consensus and EPS Surprise
GATX CORP Price, Consensus and EPS Surprise | GATX CORP Quote
2016 Guidance
GATX raised its full-year 2016 earnings projection to the range of $5.55 to $5.75 per diluted share as compared to the band of $5.25 to $5.45 expected earlier. The new earnings range is within the Zacks Consensus Estimate of $5.62 for 2016. The change in expectation was due to better-than-expected remarketing income at the company’s Portfolio Management segment.
Zacks Rank & Key Picks
GATX currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader transportation space are Cathay Pacific Airways Limited CPCAY and Air Lease Corp AL with a Zack Rank #1 (Strong Buy) and ANA Holdings Inc. ALNPY with a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CATHAY PAC AIR (CPCAY): Free Stock Analysis Report
ANA HOLDINGS (ALNPY): Free Stock Analysis Report
AIR LEASE CORP (AL): Free Stock Analysis Report
GATX CORP (GATX): Free Stock Analysis Report
To read this article on Zacks.com click here.
