Is Greenbrier's Stunning Oil-by-Railroad Rally Over Yet, or Can It Roll On?

NEW YORK (TheStreet) -- Shares of Greenbrier (GBX), one of the biggest providers of transportation equipment and services to the North American railroad industry, have doubled this year. The stock was trading Tuesday at $65.45 as of 10:15 a.m.

But can the shares go any higher?

Last week, Greenbrier released its quarterly results that came in well over analysts' estimates. The company continues to grow based on strength in the U.S. energy and automobile industries. Moreover, the U.S. government is expected to introduce new regulations related to safety of crude-by-rail shipments, which should have a positive impact on Greenbrier's order book.

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Greenbrier's shares have risen by 100% this calendar year, closing at $65.85 on Monday. However, the company has lower enterprise value to annualized operating income and annualized revenues ratios as compared to the average of its biggest peers, American Railcar Industries (ARII), Westinghouse Air Brake Technologies (WAB) and Trinity Industries (TRN).

In other words, Greenbrier still has room for upside.

 

Symbol

EV-to-EBIT

EV-to-Revenues

American Railcar Industries

ARII

11.57

2.32

Wabtec Corp

WAB

16.91

2.96

Trinity Industries

TRN

5.83

1.56

Average

 

11.44

2.28

Greenbrier Companies

GBX

11.33

1.00

Greenbrier manufactures and sells its railroad freight-cars and equipment mainly in North America. The company reports its revenues under three segments: manufacturing, the backbone of Greenbrier; wheels, repairs and parts, which was responsible for more than a quarter of its annual revenues in 2013; and a small leasing and services business.

Over the last three years, Greenbrier's growth has been driven by the manufacturing segment due to increasing railcar deliveries. In 2013, the company reported manufacturing revenues of $1.2 billion, up more than 68% from 2011. On the other hand, the other two segments witnessed growth of less than 4% in the same period.

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