Textainer Group Holdings - Aggressive Growth

Textainer Group (TGH) posted another earnings surprise last week as its utilization rates hit a company high.

Company Description

Textainer is the biggest lessor of intermodal containers. The company has dry freight, refrigerated and other specialized containers.

Revenue Up 37%

On Aug 12 Textainer reported second quarter results that included revenue of $74.5 million, which is up more than $20 million since the previous year.

Earnings per share came in at 59 cents, topping the Zacks Consensus Estimate by 9 cents. This marked the third consecutive earnings surprise.

Utilization rates are up to 98.6%, the highest the company has ever seen. The average rate for the period was 95.3%, a 10% improvement.

Estimates Rising

We are still waiting on the rest of the covering analysts to report new earnings estimates, but the initial trend is looking bullish. The average projection for 2010 is up to $2.17, from $2.12.

Next year's estimates are averaging $2.51, up a dime in the past month. Given the $1.69 Textainer earned last year the growth rates are expected to be 28% this year and another 17% next year.

Valuations

Shares of TGH are trading at less than 11 times next year's estimates. The growth is also coming at a fair price as the PEG ratio is coming in at 1.0.

Industry Comparison

Textainer operates with a net profit margin of 33%, more than 6 times the industry average. The company's profit margin is 15.5%, double that of its peers.

The Chart

There was a bit of profit taking heading into and on the earnings release, but shares are bouncing back. As estimates continue to come in, those valuations will continue to improve and TGH should continue its trend higher.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service
 
TEXTAINER GROUP (TGH): Free Stock Analysis Report
 
Zacks Investment Research