Following the second quarter earnings announcement on July 19,
more than half of the analysts covering
) have revised the estimates upward. The upward revisions were
based on higher lease rates, better asset utilization, and
improvement in lease terms alongside higher demand for
Second Quarter Highlights
Adjusted EPS for the second quarter was 80 cents, up 86% year
over year and also above the Zacks Consensus Estimate of 61
Revenues for the second quarter increased 9% year over year to
$343 million and surpassed the Zacks Consensus Estimate of $338
million, aided by lease rates, North American fleet utilization and
growth in the lease terms.
Agreements of Analysts
Of the five analysts covering the stock in the last 7 days, one
revised estimates upward, but none cut their estimates for the
ensuing third quarter of 2012. However, for the fourth
quarter of 2012, out of the five analysts covering the stock, none
raised the EPS estimate for the fourth quarter of fiscal 2012 but
one reduced the same.
For fiscal 2012, one out of the three analysts revised the
estimate upward while none slashed them. Likewise, for fiscal 2013,
out of the six analysts, one analyst increased the estimate but
Currently, the Zacks Consensus EPS Estimate for the third
quarter of 2012 is pegged at 65 cents per share with a projected
annual decline of 2.99%. Similarly, for the fourth quarter of 2012,
the current Zacks Consensus EPS Estimate of 66 cents per share
reflects a year-over-year gain of 5.81%.
Magnitude of Estimate Revisions
In synergy with the upward revision of estimate during the last
7 days, the current Zacks Consensus Estimates for the third quarter
of 2012 is just a penny above the previous estimates of 64 cents.
However, for the fourth quarter of 2012, the current Zacks
Consensus Estimates is in line with the previous estimate of 66
cents over the last 7 days.
For fiscal 2012, during the last 7 days, the current Zacks
Consensus Estimates was 6 cents above the previous estimate of
$2.73. Likewise, for 2013, the current Zacks Consensus Estimates
was 4 cents above the previous estimate of $3.14.
With respect to earnings surprises, the company has produced an
average surprise of 23.58% in the trailing four quarters. The
current Zacks Consensus Estimates for both the ongoing quarter and
the fourth quarter of 2012 contain 0.00% upside potentials
(essentially a proxy for future earning surprises), respectively,
while for fiscal 2012 downside potential is 0.00%. However, Zacks
Consensus Estimate for fiscal 2013 reflects an upside potentials of
We expect GATX Corp. to benefit from higher lease rates and
increased asset utilization and remarketing opportunities. The
company's segments remain poised to deliver strong results given
improvements in underlying market fundamentals. Further, expansion
of the company's asset base to enhance its long-term performance as
well as paying higher returns to shareholders through dividend
payments bode well for increased market traction. However,
regulatory pressures and competitive threats from carriers like
American Railcar Industries, Inc.
) compel us to remain cautious on the stock.
We currently have a long-term Outperform recommendation on GATX.
However, for the short term (1-3 months), the stock has a Zacks #2
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years
ago that earnings estimate revisions are the most powerful force
impacting stock prices. He turned this ground breaking discovery
into two of the most celebrating stock rating systems in use
today. The Zacks Rank for stock trading in a 1 to 3 month time
horizon and the Zacks Recommendation for long-term investing (6+
months). These "Earnings Estimate Scorecard" articles help
analyze the important aspects of estimate revisions for each
stock after their quarterly earnings announcements. Learn more
about earnings estimates and our proven stock ratings at:
AMER RAILCAR (ARII): Free Stock Analysis Report
GATX CORP (GMT): Free Stock Analysis Report
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