The Associated Press
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Missouri-based American Railcar Industries Inc. is a leading North American designer and manufacturer of hopper and tank railcars. It manufactures and sells railcars, custom designed railcar parts, and other industrial products. It also leases railcars manufactured by the company to certain markets and provides railcar repair services through its various repair facilities, including mini-shops and mobile units. Its market cap is $1.7-billion (U.S.).
The company has grown earnings at a 38-per-cent pace over the long term (using an average of the 4- and 5-year EPS growth rates), far ahead of railroad industry average of 12 per cent.
Its growth rate and 16.9 P/E ratio make for a 0.44 PE-to-growth ratio, part of why the Peter Lynch model has strong interest. The company also has a declining inventory/sales ratio (15.47 per cent last year, 12.01 per cent this year), showing its products are in demand. Debt/equity ratio of 67 per cent comes in under the Lynch model's 80 per cent limit.
American Railcar has a red-hot 93 relative strength over the past 12 months and 12-per-cent profit margins, two reasons why the Motley Fool inspired model has some interest. The Fool model also likes its strong growth last quarter (36.04 per cent for EPS, and 49 per cent for sales).
The company has averaged a 58-per-cent return on retained earnings (those not paid out as dividends) over the past decade, which the Warren Buffett model likes. (Berkshire Hathaway has been a big player in the rail industry, purchasing Burlington Northern a few years back.)
American Railcar has a 23-per-cent return on equity and offers 2.1-per-cent dividend.
John Reese owns ARII.
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