Genesee & Wyoming Scales 52-Week High on Multiple Tailwinds
Shares of Genesee & Wyoming, Inc. GWR hit a 52-week high of $90.66 during the trading session on Sep 18 before retracing a bit to close at $90.43. Moreover, the stock has rallied 23.3% in the past six months, outperforming the industry’s 18.5% increase.
Reasons Behind the Rally
Genesee & Wyoming’s growth-by-acquisition policy to augment its top line is encouraging. In this regard, it is worth noting that Genesee & Wyoming completed the buyout of Freightliner (U.K.’s largest rail maritime intermodal operator) in March 2015, boosting its U.K./European operations. Its projection for 2018 operating revenues supports its healthy top-line improvement. Operating revenues in 2018 are estimated between $2,335 million and $2,365 million, much higher than $2,208 million reported in 2017.
The company’s upbeat traffic volumes in the past few months, courtesy of favorable freight demand, further highlight the air of optimism surrounding the company. Notably, traffic volumes rose 6.6%, 2.7% and 6.8% in May, July and August respectively. This upside was driven primarily by higher traffic at the North American and Australian operations.
With the amended tax law, all transportation stocks are reaping benefits from the reduced corporate tax rate and Genesee & Wyoming is not far from it. On the back of huge tax savings among other tailwinds, the company expects 2018 adjusted earnings per share between $3.80 and $3.90, much above $2.91 registered in 2017.
The company’s shareholder-friendly measures are also impressive, highlighting its strong financial position. It initiated a repurchase program worth $300 million, expected to be completed by this year-end. Under the authorization, it bought back approximately 2.1 million shares for $150 million at the end of April. The company’s continued rise in free cash flow has been supporting such investor-friendly moves. Adjusted free cash flow (attributable to the company excluding new business investments and grant-funded projects) increased to $270 million in 2017 from $68 million in 2008. The metric is expected to further reach $370 million at the end of 2018.
Zacks Rank & Key Picks
Genesee & Wyoming carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. SKYW, Trinity Industries, Inc. TRN and Old Dominion Freight Line, Inc. ODFL. While Old Dominion holds a Zacks Rank #2 (Buy), SkyWest and Trinity sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of SkyWest, Trinity and Old Dominion have rallied more than 42%, 20% and 56%, respectively, in a year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
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
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
Trinity Industries, Inc. (TRN) : Free Stock Analysis Report
Genesee & Wyoming, Inc. (GWR) : Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
