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Why Is Gatx (GATX) Up 4% Since Last Earnings Report?

Zacks Equity Research
·2 mins read

A month has gone by since the last earnings report for Gatx (GATX). Shares have added about 4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Gatx due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at GATX in Q2

GATX's earnings per share (excluding 6 cents from non-recurring items) came in at $1.05, surpassing the Zacks Consensus Estimate of 91 cents. However, the bottom line declined year over year due to coronavirus-led disruptions on Rail North America and Rail International segments. Total revenues were $300.5 million in the reported quarter. Total expenses (on a reported basis) inched up 2.3% to $232.2 million.

Segmental Results

Profits in the Rail North America segment decreased to $50 million from the prior-year quarter’s level of $85.8 million. This downside was due to low gains on asset dispositions. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was -28% in the reported quarter, compared with the year-ago quarter’s -2.8%. Additionally, average lease renewal term for cars included in the LPI was 31 months, compared with 40 months in the year-ago quarter.

In fact, Rail North America’s wholly owned fleet had approximately 117,800 rail cars at the end of June 2020. Fleet utilization was 98.7%, compared with 99.5% at the end of second-quarter 2019.

In the Rail International segment, profits fell 6.1% year over year to $20 million. Results were hurt by coronavirus-led shutdowns at railcar manufacturing facilities.

Moreover, GATX Rail Europe’s fleet totaled 25,700 rail cars at the end of the quarter. Fleet utilization was 98.4%, compared with 98.9% at the end of second-quarter 2019.

In the Portfolio Management unit, profits surged 62.2% year over year to $19.3 million, driven by the Rolls-Royce and Partner Finance affiliates’ buoyant performance.

Liquidity

GATX exited the second quarter with cash and cash equivalents of $492.9 million compared with $151 million at the end of 2019.

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.


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