Genesee & Wyoming (GWR) Stock Up 26% in 6 Months: Here's Why

Genesee & Wyoming Inc.GWR has been performing impressively of late. Evidently, the stock has gained 25.9% in the past six months, outperforming its industry 's 21.8% rally.

Reasons Behind the Outperformance

Genesee & Wyoming performed very well in the second quarter of 2018, results of which were announced last month. In the quarter, this Darien, CT-based railroad operator reported better-than-expected earnings and revenues. Both the metrics also improved substantially on a year-over-year basis. A low effective tax rate aided results. Geographically, operating revenues from North American, Australian and U.K./European operations increased 7.6%, 2.9% and 19.2%, respectively.

Backed by huge tax savings and other positives, Genesee & Wyoming expects 2018 adjusted earnings per share to be between $3.80 and $3.90, much higher than $2.91 reported in 2017. The Zacks Consensus Estimate for current-year earnings stands at $3.87, well within the company's guided range. Moreover, the measure has been revised 0.5% upward over the last 60 days.

Genesee & Wyoming's efforts to reward shareholders are impressive as well. To this end, the company initiated a repurchase program worth $300 million. The program is expected to be completed by the year end. The company has repurchased approximately 2.1 million shares for $150 million at the end of April 2018.

Furthermore, the company's impressive adjusted free cash flow generation has been part of its shareholder-friendly moves. Adjusted free cash flow (attributable to the company excluding new business investments and grant funded projects) increased to $270 million in 2017 from $68 million in 2008. The metric is expected to increase further to $370 million at the end of 2018.

Zacks Rank & Key Picks

Genesee & Wyoming carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. SKYW , CSX Corporation CSX and Norfolk Southern Corporation NSC . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Shares of SkyWest, CSX and Norfolk have surged more than 17%, 37% and 27%, respectively, over the past six months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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