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Why Is Gatx (GATX) Down 7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Gatx (GATX). Shares have lost about 7% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

GATX Q1 Earnings Top Estimates

GATX's earnings (excluding 24 cents from non-recurring items) of $2.34 per share surpassed the Zacks Consensus Estimate of $1.37. The bottom line surged more than 100% year over year.

Lease revenues, which contributed 89.5% to the top line, increased marginally year over year to $283.3 million. Marine operating revenues contributed 1.96% to the top line of GATX and increased to $6.2 million from $3.6 million a year ago. The rest came from other sources. Total expenses (on a reported basis) declined marginally to $235.7 million.

Segmental Details

Profits in the Rail North America segment soared 83% year over year to $120.4 million. The upside was primarily led by higher gains on asset dispositions. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was +9.3% in the reported quarter compared with the year-ago quarter’s -18.1%. Average lease renewal term for cars included in the LPI was 30 months, flat year over year.

In the Rail International segment, profits rose 14.2% year over year to $24.9 million in the first quarter. Results were primarily driven by more railcars on lease. Rail North America’s wholly-owned fleet consisted of approximately 110,700 rail cars at the end of Mar 31, 2022. Fleet utilization was 99.3% compared with 97.8% at the end of first-quarter 2021.

GATX Rail Europe’s fleet totaled around 27,200 rail cars at the end of the quarter. Fleet utilization was 99% in the reported quarter compared with 98.2% at the end of the first quarter of 2021.

The Portfolio Management unit reported a segmental loss of $3.9 million in the March quarter against a profit of $6.1 million in the year-ago quarter. Notably, in the March quarter, the Rolls-Royce and Partners Finance affiliates terminated leases with its Russian airline customer.

Liquidity

GATX exited the first-quarter with cash and cash equivalents of $649.3 million compared with $344.3 million at the end of 2021.

2022 Outlook

GATX’s management still expects 2022 earnings per share to be in the range of $5.50-$5.80

 

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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