Shares of GATX CorporationGMT gained 2.79% on Oct 22 to reach $47.08, following higher-than-expected earnings reported by the company in the third quarter of 2015.
The railcar leasing company's earnings (excluding the net after-tax loss of $26.6 million or 61 cents per share pertaining to its decision to exit majority of its marine investments within the Portfolio Management unit) came in at $1.52 per share, ahead of the Zacks Consensus Estimate by 13 cents and up 33.3% from the year-ago quarter number.
Revenues of $386.2 million lagged the Zacks Consensus Estimate of $398 million and declined 2.8% on a year-over-year basis. Lower marine operating revenues hurt the top line. Total expenses declined approximately 7% to $282.4 million in the third quarter.
Profits from the Rail North America segment improved to $90 million from $70.6 million in the third quarter of 2014. Segmental profit was boosted primarily due to improved utilization and higher lease rates across the fleet.
During the reported quarter, GATX's Lease Price Index (LPI) increased 25.6% over the weighted-average expiring lease rate. In comparison, LPI was up 46.9% a year ago. LPI was adversely impacted by the weak coal market. Furthermore, the average lease renewal term for cars included in the LPI was 60 months versus 68 months in the comparable quarter last year.
GATX stated in its press release that Rail North America's wholly owned fleet had approximately 125,000 rail-cars at the end of the third quarter of 2015. Fleet utilization increased to 99.2% from 98.8% in the year-earlier quarter.
Profit from the Rail International segment declined 21.3% year over year to $15.5 million. GATX Rail Europe's fleet totaled approximately 22,800 cars at the end of the reported quarter. Fleet utilization was 95.7% versus 95.1% at the end of the comparable quarter of 2014. Softness in the Euro hurt segmental profit.
The Portfolio Management unit incurred a loss of $17.3 million in the third quarter of 2015.
The American Steamship Company segment made a profit of $10.9 million in the third quarter, down 28.3% year over year. Segmental results were hurt by the commodity and trade mix variances.
GATX exited the third quarter of 2015 with cash and cash equivalents of $116 million compared with $209.9 million at the end of 2014. Restricted cash was $15.5 million as opposed to $14.4 million at the end of 2014. The company bought back more than 915,500 shares in the reported quarter for $43 million.
GATX expects 2015 earnings per share to come in at the upper range of the company's previously projected band of $5.15 to $5.35. The Zacks Consensus Estimate for 2015 currently stands at $5.25 per share.
GATX currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the transportation space are Ryanair Holdings RYAAY , SkyWest Inc. SKYW and Virgin America VA , all of which sport a Zacks Rank #1 (Strong Buy).
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