Why Greenbrier (GBX) Is Slipping on Thursday

NEW YORK (TheStreet) -- Greenbrier Companies (GBX) is trading lower on Thursday after reporting second-quarter results below analysts' estimates.

Before the bell, shares had taken off 1.7% to $46.90.

In the three months to February, the manufacturer of railroad freight machinery reported net income of 51 cents a share, 9 cents lower than analysts surveyed by Thomson Reuters anticipated.

Revenue of $502.2 million was an 18.7% year-over-year increase but missed estimates of $508.69 million.

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TheStreet Ratings team rates GREENBRIER COMPANIES INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GREENBRIER COMPANIES INC (GBX) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 17.1%. Since the same quarter one year prior, revenues rose by 18.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 40.00% and other important driving factors, this stock has surged by 104.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • GREENBRIER COMPANIES INC has improved earnings per share by 40.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GREENBRIER COMPANIES INC swung to a loss, reporting -$0.66 versus $1.92 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus -$0.66).
  • The gross profit margin for GREENBRIER COMPANIES INC is currently extremely low, coming in at 14.78%. Regardless of GBX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.13% trails the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Machinery industry and the overall market, GREENBRIER COMPANIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

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