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GATX Corp (GATX) Misses on Q4 Earnings, Stock Down 3.3%

GATX Corporation’s GATX fourth-quarter 2020 earnings of 50 cents per share missed the Zacks Consensus Estimate of 86 cents. Moreover, the bottom line declined year over year primarily due to lower profitability in the Rail North America segment and below-par performance in the Portfolio Management unit. The lacklustre bottom-line performance disappointed investors. Consequently, the stock lost 3.3% of its value on Jan 28.

Total revenues were $304.9 million in the reported quarter. Bulk of the top line (89.9%) came from lease revenues. Marine operating revenues contributed 1.3% to the top line. The balance came from other sources. Meanwhile, total expenses (on a reported basis) dropped 3.2% to $231.3 million.

Segmental Results

Profits in the Rail North America segment declined to $49.5 million in the fourth quarter from the prior-year quarter’s level of $61.1 million. The downside was primarily caused by lower gains on asset dispositions in the quarter. The renewal lease rate change of the company’s Lease Price Index (“LPI”) was -22.6% in the reported quarter compared with the year-ago quarter’s -9.1%. Additionally, average lease renewal term for cars included in the LPI was 34 months compared with 37 months in the year-ago quarter.

In fact, Rail North America’s wholly-owned fleet had approximately 118,100 rail cars at the end of Dec 31, 2020. Fleet utilization was 98.1% compared with 99.3% at the end of fourth-quarter 2019.

GATX Corporation Price, Consensus and EPS Surprise

 

GATX Corporation price-consensus-eps-surprise-chart | GATX Corporation Quote

 

Meanwhile, in the Rail International segment, profits rose to $25.6 million in the fourth quarter from the prior-year quarter’s level of $22.9 million. Results were driven by more railcars on lease.

Also, GATX Rail Europe’s fleet totaled 26,350 rail cars at the end of the quarter. Fleet utilization was 98.1% compared with 99.3% at the end of fourth-quarter 2019.

The Portfolio Management unit reported segmental loss of $5.7 million in the December-end quarter against the segmental profit of $27.5 million in fourth-quarter 2019. The deterioration was primarily due to the performance at the Rolls-Royce and Partners Finance affiliates.

Liquidity

GATX, carrying a Zacks Rank #3 (Hold), exited the fourth quarter with cash and cash equivalents of $292.2 million compared with $151 million at the end of 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sectorial Snapshots

Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.

United Airlines UAL incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Further, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.

J.B. Hunt Transport Services JBHT reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.

Delta Air Lines DAL incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.

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