GWR Continues To Be Well Positioned To Take On Higher Freight Levels

Analysts at Dahlman Rose maintain their "hold" rating on Genesee & Wyoming GWR, while raising their estimates for the company. GWR reported its 2Q10 EPS from continuing operations ahead of the estimates and the consensus. According to Dahlman Rose, “Revenue grew 21.8% y/y to $158.5 MM, vs our and consensus estimate of $152.6 MM. Operating income increased 66% to $37.7 MM. The operating ratio of 76.1% represented a 640 bps improvement form 2Q09. However, Genesee & Wyoming completed its final round of cost reductions late in the second quarter of 2009. Therefore, 2Q09 did not fully reflect the lower cost structure the company has implemented since the trough of the recession. That said, 2Q10 OR represented a 320 bps improvement from the 79.3% OR reported in 1Q10.” Genesee & Wyoming has also raised its guidance for FY10. “Additionally, the company has done a good job in managing costs throughout the downturn and the early stages of the recovery and is still well positioned to take on higher freight levels at low incremental cost,” the analysts say. Dahlman Rose has raised its EPS estimates for 2010 and 2011 from $1.70 to $1.80 and from $2.70 to $2.75, respectively. More Analyst Ratings here.