On Apr 10, 2014, we issued an updated research report on
). We believe strong lease renewal activities and continued
growth in lease rates will drive growth for the company.
Additionally, fleet modernization, higher asset utilization and
an improving European railcar business will fuel growth over the
GATX has delivered positive earnings surprise in the last two
quarters out of four, with an average positive surprise of 0.05%.
The company's fourth-quarter 2013 earnings and revenues beat
GATX, continues to deliver strong results across most of its
segments. We expect the company's Rail segment to gain from
higher lease rates, addition of new railcars and accelerated
lease renewals. In North America, leases on 20,000 new railcars
are scheduled for renewal and the company expects a renewal rate
change of Lease Price Index (LPI) in the range of 30 -35%.
Thus, the growing demand for railcars would help secure long-term
lease contracts in the future with improvement in the market.
GATX focuses on improving its financial performance and
maintains earnings projection for 2014 in the range of $3.85 to
$4.05. The current Zacks Consensus Estimate for 2014 is currently
pegged at $3.94. The company expects earnings growth to be driven
by continued strength in North American rail and an improving
European railcar business.
On the other hand, GATX operates in a highly competitive
business environment. Competitors may offer leases and loans to
customers at lower rates than GATX, thus affecting the company's
asset utilization or ability to lease assets profitably.
The company's profitability is largely dependent on its
ability to maintain assets on lease at satisfactory rates and to
re-lease or sell assets upon lease expiration. An economic
downturn resulting in reduced demand, changes in customer
behaviour and supply/demand dynamics can adversely affect asset
utilization and lease rates, which in turn, might hurt the
GATX currently carries a Zacks Rank #2 (Buy).
Stocks That Warrant a Look
Other better-ranked stocks worth considering in this sector
Ryder System, Inc.
Trinity Industries Inc.
Westinghouse Air Brake Technologies Corp.
). All these stocks carry the same Zacks Rank as GATX.
GATX CORP (GMT): Free Stock Analysis Report
RYDER SYS (R): Free Stock Analysis Report
TRINITY INDS IN (TRN): Free Stock Analysis
WABTECH (WAB): Free Stock Analysis Report
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