NEW YORK (TheStreet) -- American Railcar Industries, Inc. (ARII) - Get Report shares are climbing, up 1% to $70.89, on Thursday after activist investor Carl Icahn (IEP) - Get Report resigned from his position as the company's director and chairman.
The company stated that the resignation was not a result of any disagreement between Icahn and the company, but rather Icahn wanted to reduce the number of boards he serves on.
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TheStreet Ratings team rates AMERICAN RAILCAR INDS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN RAILCAR INDS INC (ARII) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 113.03% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ARII should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- AMERICAN RAILCAR INDS INC has improved earnings per share by 15.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMERICAN RAILCAR INDS INC increased its bottom line by earning $4.07 versus $2.99 in the prior year. This year, the market expects an improvement in earnings ($4.47 versus $4.07).
- The debt-to-equity ratio is somewhat low, currently at 0.71, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, ARII has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market, AMERICAN RAILCAR INDS INC's return on equity exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income increased by 15.8% when compared to the same quarter one year prior, going from $17.94 million to $20.77 million.
- You can view the full analysis from the report here: ARII Ratings Report