Greenbrier Surges as Rail-Car Maker Sees Recovery Next Year
Greenbrier Cos. jumped the most in four years as the railcar maker said a recovery in freight volume means 2018 earnings will be stronger than analysts have been expecting.
Next year’s profit “might be slightly down from 2017, but it’s not going to be the nearly 40% drop that you saw from 2016 to 2017,” Chief Financial Officer Lorie Tekorius said Jan. 6 on a conference call with analysts, according to a Bloomberg News transcript. She cited a “healthy backlog” in railcar production.
The shares climbed 16% to $46.78 at 1:42 p.m. in New York after jumping as much as 18%, the biggest intraday advance since November 2012.
“Essentially, the company thinks Street estimates for 2018 are too low,” Michael Baudendistel, an analyst at Stifel Financial Corp., said in a note to clients.
Greenbrier’s adjusted earnings are expected to drop 36% on a per-share basis this year and decline another 42% in 2018, according to analysts’ estimates compiled by Bloomberg. The company reported earnings of 79 cents a share for the fiscal first quarter, down from $2.13 a year earlier.
There are signs railcar demand may stabilize after a boom to build oil tank cars went bust when crude prices dropped from $100 a barrel in mid-2014 to below $50. Railroads are expected to post freight volume gains in 2017 after two years of declines that compelled carriers to slash investment. Rail volume is estimated to increase 2.4% this year, Justin Long, a Stephens Inc. analyst, said in a Jan. 4 report.
Greenbrier, based in Lake Oswego, Oregon, reported orders of 2,400 rail cars in the first quarter, which ran through November. That exceeded an estimate of 2,100 by Matt Elkott, an analyst at Cowen & Co.
