Greenbrier Companies (GBX) Shows Signs Of Being Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Greenbrier Companies ( GBX) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Greenbrier Companies as such a stock due to the following factors:

  • GBX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.7 million.
  • GBX has traded 145,433 shares today.
  • GBX traded in a range 240.8% of the normal price range with a price range of $5.11.
  • GBX traded below its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on GBX:

The Greenbrier Companies, Inc. designs, manufactures, and markets railroad freight car equipment in North America and Europe. The stock currently has a dividend yield of 0.9%. GBX has a PE ratio of 19.3. Currently there are 6 analysts that rate Greenbrier Companies a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Greenbrier Companies has been 985,600 shares per day over the past 30 days. Greenbrier Companies has a market cap of $1.8 billion and is part of the services sector and transportation industry. Shares are up 101.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Greenbrier Companies as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 27.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Machinery industry and the overall market, GREENBRIER COMPANIES INC's return on equity exceeds that of both the industry average and the S&P 500.
  • GREENBRIER COMPANIES INC reported significant earnings per share improvement 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, GREENBRIER COMPANIES INC turned its bottom line around by earning $3.45 versus -$0.66 in the prior year. This year, the market expects an improvement in earnings ($4.40 versus $3.45).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 128.6% when compared to the same quarter one year prior, rising from $20.72 million to $47.36 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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