Greenbrier Analyst Slashes Estimates Post Q1 Results To Reflect Continued Operational Headwinds

KeyBanc analyst Steve Barger maintained Sector Weight on Greenbrier Companies, Inc GBX. GBX shares saw a sharp decline following its F1Q23 results and call.
Barger wrote that a sizable margin and EPS miss drove the decline in the quarter despite steadily improving revenue per car over the past six quarters.
These results met with broad manufacturing and supply initiatives designed to improve efficiency, which could catalyze better results in the coming quarters.
While this is a disappointing quarter in the context of a modest but persistent upcycle, perhaps the more important takeaway is how little patience investors will have for operational missteps in an environment of higher rates and cycle concerns.
Barger reduced the FY23 EPS estimate to $2.15 from $2.71 (consensus $2.55).
The revision reflects higher revenue from higher ASP and car but a lower margin.
Barger also reduced the FY24 EPS estimate to $2.71 from $3.09 (consensus $2.95). The estimate reduction reflected higher revenue from higher ASP offset by lower margin expectations.
GBX primarily drives margin expansion by improving its manufacturing footprint and managing supply chain costs.
GBX's actions include investing in bringing critical component fabrication in-house; ceasing railcar production at its Portland, OR, facility; and conducting a strategic evaluation of its Marine business.
The analyst thinks these are steps in the right direction but remain concerned about the timing of potential benefits relative to macro concerns.
Barger sought a more straightforward path to consistency before becoming more constructive.
Price Action: GBX shares traded higher by 1.64% at $29.13 on the last check Monday.

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