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GATX Earnings Outperform Estimates But Decrease Y/Y in Q3

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GATX Corporation GATX reported mixed results in the third quarter of 2018. The company’s earnings of $1.22 per share surpassed the Zacks Consensus Estimate of $1.05. However, the bottom line dipped 2.4% year over year.

Revenues came in at $349.7 million, falling short of the Zacks Consensus Estimate of $356.4 million. Moreover, the top line slid 2.8% on a year-over-year basis.

The revenue miss as well as the year-over-year decline in both the top and the bottom line displeased investors. As a result, the stock fell 6.5% at the close of business on Oct 23.

GATX Corporation Price, Consensus and EPS Surprise

GATX Corporation Price, Consensus and EPS Surprise | GATX Corporation Quote


Segment-Wise Results

Profits at the Rail North America segment decreased to $68.2 million from $70.2 million a year ago. This downside was primarily due to lower segmental revenues. The renewal lease rate change of the company’s Lease Price Index (LPI) was -11.5% in the third quarter. Additionally, average lease renewal term for cars included in the LPI was 33 months compared with 35 in the year-ago quarter.

Rail North America’s wholly-owned fleet had approximately119,000 railcars at the end of the reported quarter. Fleet utilization came in at 99.2% compared with 98.5% at the end of the year-ago period.

In the quarter under review, profits at the Rail International segment increased approximately 3% year over year to $20.7 million. Results were driven by a rise in railcars on lease and favorable movements related to foreign exchange.

Moreover, GATX Rail Europe’s fleet totaled approximately 23,000 railcars at the end of the third quarter. Fleet utilization was 98.4% compared with 95.6% at the end of third-quarter 2017.

At the Portfolio Management unit, profits plunged around 30% to $9 million. Segmental performances were hurt by lower residual sharing fees and lower marine operating results. Also, the American Steamship segment's profit slipped 1.7% to $11.9 million in the quarter under discussion due to reduction in tonnage transported.

Liquidity

This Zacks Rank #3 (Hold) company exited the third quarter with cash and cash equivalents of $254.5 million compared with $296.5 million at 2017 end. Restricted cash was $4.1 million compared with $3.2 million at the end of the previous year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

2018 EPS View Intact

The company continues to expect full-year earnings per share (excluding the effect of tax adjustments and other items) in the range of $4.90-$5.10. The Zacks Consensus Estimate for the same stands at $5.06.

Upcoming Releases

Investors interested in the broader Zacks Transportation sector are keenly awaiting third-quarter earnings reports from key players like Southwest Airlines Co. LUV, Old Dominion Freight Line, Inc. ODFL and Union Pacific Corporation UNP. Each company will report respective earnings numbers on Oct 25.

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