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FreightCar shares fall on disappointing 2Q profit

NEW YORK (AP) -- Shares of FreightCar America tumbled 11 percent Monday after the railroad car maker posted disappointing second-quarter earnings.

THE SPARK: The Chicago company reported net income of $5.6 million, or 46 cents per share. Even though that handily beat the year-ago profit of $184,000, or 2 cents per share, Wall Street was looking for about a dime better per share, according to a survey by FactSet.

Revenue jumped 86 percent to $181.2 million, also short of predictions for $187.6 million.

THE BIG PICTURE: Weak prices for coal may be trickling down to the freight car maker. Railroads have been reporting double-digit declines in coal shipments because utilities are switching to cheaper natural gas to generate power.

THE ANALYSIS: Jefferies analyst Peter Nesvold said a higher tax rate contributed to FreightCar's miss but gross margins and profit per car were both slightly less than expected.

The company delivered more cars than expected, Nesvold said in a note to clients. However, 13 percent were used cars compared with just 3 percent in the previous quarter. He said this shift in mix of cars should continue for the next several quarters.

SHARE ACTION: Shares of FreightCar America Inc. fell $2.24 to $18.74 in heavy midday trading after falling as low as $17.20 earlier in the session. In the past year, the shares have ranged from a low of $12.82 in October to a high of $30.18 in February.