Gatx (GATX) Down 4.7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Gatx (GATX). Shares have lost about 4.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gatx due for a breakout? 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 catalysts.
GATX Q4 Earnings Beat Estimates
GATX's earnings of $1.54 per share outpaced the Zacks Consensus Estimate of $1.38. The bottom line fell 2.5% year over year. Revenues of $322.7 million missed the Zacks Consensus Estimate of $328.9 million but improved 0.5% year over year.
Lease revenues of $294 million grew 1.9% year over year. While Marine operating revenues decreased 50% to $2.7 million, revenues from other sources fell 4.4% to $26 million. Total expenses (on a reported basis) declined by $15.1 million to $233.1 million.
Profits in the Rail North American segment declined to $83.5 million from $75.6 million a year ago. The renewal lease rate change of GATX’s Lease Price Index (LPI) was 29.7% in the reported quarter against the year-ago quarter’s -0.7%. The average lease renewal term for cars included in the LPI was 34 months compared with 37 months a year ago.
Rail North America’s wholly-owned fleet consisted of approximately 109,600 rail cars at the end of Dec 31, 2022. Fleet utilization was 99.5% compared with 99.6% at the end of third-quarter 2021.
In the Rail International segment, profits fell 37% year over year to $18.2 million in the fourth quarter. Results were unfavorably impacted by foreign currency exchange rate fluctuations, partially offset by more railcars on lease.
GATX Rail Europe’s fleet totaled around 27,658 rail cars at the end of the quarter. Fleet utilization was 99.3% in the reported quarter compared with 98.7% at the end of fourth-quarter 2021.
The Portfolio Management unit reported a segmental profit of $23.1 million in the fourth quarter compared with $36.3 million in the year-ago quarter.
As of Dec 31, 2022, GATX had cash and cash equivalents of $303.7 million compared with $596.3 million at the end of September 2022. GATX anticipates full-year 2023 earnings guidance of $6.50-$6.90 per share.
For 2023, GATX anticipates the railcar leasing environment in North America to remain favorable. Rail International’s 2023 segment profit is likely to rise as solid demand for new and existing railcars continues in Europe and India. Coupled with increased earnings from GATX Engine Leasing, Portfolio Management is expected to generate higher segment profit in 2023.
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 an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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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GATX Corporation (GATX) : Free Stock Analysis Report
