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GATX Hurt By Currency Fluctuations And Coronavirus Woes

Zacks Equity Research

We recently issued an updated report on GATX Corporation GATX.

Like many other transportation companies, GATX is hit by the uncertainties related to the COVID-19 pandemic. The coronavirus-induced economic slowdown is expected to hurt its second-quarter 2020 results as well.

The below-par performance of the Rail International segment, which is a significant contributor to the company’s top line, is a headwind. Notably, segmental profits fell 6.1% year over year in the March quarter due to fluctuations in foreign currency exchange rates.  

Considering the downturn in the railcar leasing market, average lease rate on lease renewals are expected to be low in 2020. This, in turn, might put pressure on the Rail North America segment’s profitability.  In fact, GATX suspended its previously-announced 2020 guidance due to uncertainties related to the pandemic.

Due to the ongoing crisis, shares of GATX have declined more than 19% since the beginning of February.  Moreover, the Zacks Consensus Estimate for 2020 earnings has been revised downward by more than 100% in the past 60 days.

However, GATX’s liquidity position looks impressive. The company had no short-term debt obligations at the end of the first quarter. Its cash and cash equivalents at the end of the period stood at $571 million.

Zacks Rank & Key Picks

GATX carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the Zacks Transportation sector are Scorpio Tankers Inc. STNG, Teekay Tankers Ltd. TNK and Nordic American Tankers Limited NAT. Scorpio Tankers and Teekay Tankers sport a Zacks Rank #1 (Strong Buy), while Nordic American Tankers carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Scorpio Tankers’ current-year earnings has been revised upward in excess of 100% in the past 60 days.

The Zacks Consensus Estimate for Teekay Tanker’s current-year earnings has been revised upward by 49.4% in the past 60 days.

The Zacks Consensus Estimate for Nordic American Tankers’ current-year earnings has been revised upward by 14.1% in the past 60 days.

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Nordic American Tankers Limited (NAT) : Free Stock Analysis Report
 
Teekay Tankers Ltd. (TNK) : Free Stock Analysis Report
 
Scorpio Tankers Inc. (STNG) : Free Stock Analysis Report
 
GATX Corporation (GATX) : Free Stock Analysis Report
 
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