Railcar manufacturer Greenbrier (GBX 21. 09%) used strong cost management to easily top expectations and raise fitability guidance for the year.
Investors are relieved, sending s of Greenbrier up 20% as of 12:30 p. Image source: Getty Images.
Making the most of a tough environment It is a tough operating environment for railroads, with volumes down due to economic uncertainty and the impact of tariffs.
In times this, you don't normally see railroad companies making big capital expenditures, and s of supplier Greenbrier came into earnings down 20% for the year based on those low expectations.
Late Tuesday, the company dered an earnings surprise. Greenbrier earned $1. 86 per in the quarter on revenue of $842. 7 million, easily surpassing Wall Street's $0.
98 per on revenue of $795 million consensus estimate. Revenue was only up 2.
7% year over year, but the company was able to use operating efficiencies and gains from its leasing portfolio to boost the bottom line.
"In a dynamic trade and economic environment, our focus on efficiency, agility, and strategic investment is yielding positive results," CEO Lorie L. Tekorius said in a statement.
Is Greenbrier stock a buy. The company sees more opportunities for imvement up ahead.
Greenbrier raised its full-year guidance for gross margin and operating margin, predicting $10 million in annual savings from its effort to rationalize its European network.
This is a cyclical, and it could be tough for Greenbrier to really accelerate until railroads see demand grow.
But Greenbrier if nothing else is making the case that investors had overreacted in sending the stock down big prior to earnings. For those interested in the 2.
3% dividend yield and willing to be patient to ride out a recovery, there is still time to climb on board. Lou Whiteman has no position in any of the stocks mentioned.
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.