Greenbrier Companies Remains Poised For Positive Momentum, Says Analyst

Stephens analyst Justin Long reiterated an Overweight rating on the shares of Greenbrier Companies Inc GBX and raised the price target from $62 to $65.

GBX reported fiscal 2Q24 adj. EPS of $1.03 that was above the consensus of $0.86.

The analyst added that the beat was primarily driven by higher-than-expected gains on sale and a lower-than-anticipated tax rate.

As a result, the analyst raised FY24 adj. EPS estimate to $4.20 (from $3.95) and FY25 adj. EPS estimate to $4.50 (from $4.25).

Due to Greenbrier achieving the high end of the provided guidance in 1H24 and increasing production levels in 2H24, the analyst noted the margin guidance of low-to-mid teens could prove conservative.

The analyst noted that orders accelerating over the course of the quarter, along with strong inquiries for 3Q24, will continue to enhance GBX’s production visibility into FY25.

Greenbrier continues to make strides in driving improved manufacturing margins and the analyst would not be surprised to see continued sequential improvements in manufacturing margins.

As GBX continues to invest in its lease fleet, the analyst noted the company is well on its way to achieving its target of doubling recurring revenue in the leasing & management services segment.

The analyst is encouraged by the recent improvement in new railcar orders, particularly given the weakness in the freight market and uncertain economic backdrop.

The earnings power of the business will outpace expectations, added the analyst.

Price Action: GBX shares are trading higher by 3.16% at $54.84 on the last check Monday.