Footprint Reduction And Cost Optimization Are Key To Greenbrier Companies' Increased EPS In FY25: Analyst

KeyBanc Capital Markets analyst Steve Barger reiterated the Sector Weight rating on Greenbrier Companies GBX.

GBX reported a strong 3Q, driven by excitement around improving margins and a solid preliminary 4Q order book in which the company indicated it already has 7,900 orders.

Barger expects the company to get more orders as the quarter advances, reversing the five-quarter trend of backlog declines. 

The analyst also remains bullish on easing supply chain constraints and cost-savings initiatives contributing to margin expansion in the manufacturing and maintenance segments. 

Overall, the analyst increased estimates driven by a more favorable outlook on margin performance.

For FY23, Barger raised EPS estimate to $3.11 from $2.26 (cons. $2.83). 

Supply chain normalization and cost actions may be helping GBX return to more sustainable margin performance. 

For FY24, the analyst increased FY24 EPS estimate to $3.53 from $2.70 (cons. $3.41).

Barger remains optimistic that GBX will begin making meaningful progress in FY24 towards its $50 million -$55 million cost optimization goal (~$1 million) realized since last quarter's Investor Day), with an additional $15 million - $20 million annual run rate savings beginning in 1Q24.

For FY25, the analyst increased FY25 EPS estimate to $3.65 from $2.86.

As a cost optimization initiative, GBX's recent footprint reduction is expected to benefit EPS by up to ~$1.41-$1.63 in normalized annual EPS by FY25.

Price Action: GBX shares are trading lower by 1.9% to $42.30 on the last check Wednesday.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorEquitiesNewsReiterationSmall CapMarketsAnalyst RatingsGeneralBriefsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!