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research report

This transport manufacturer shows good value in model portfolios Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor provides marketing and data services to Validea.ca and receives compensation. Try it.

Greenbrier Companies (GBX) is a transportation manufacturing company. According to the $1-billion firm's web site, it is a "leading international supplier of equipment and services to the freight rail transportation markets."

The stock gets high marks based on Validea's Price / Sale Investor strategy, which is based on the book Super Stocks, written by Kenneth Fisher. The Price / Sales model is a value strategy that rewards stocks with low price / sale ratios, long-term profit growth, strong free cash flow and consistent profit margins.

GBX's price / sales ratio of 0.38, based on trailing 12-month sales, is below 0.75, which is considered quite attractive in this model. The P/E of 6.3 and P/B of 1.2 also make the shares attractive from a valuation perspective.

Less debt equals less risk, according to this methodology, and GBX's debt/equity of 34.77 per cent is acceptable.

GBX generates free cash per share of $5.22, which is a positive, while its 3-year net profit margin of 6.44 per cent is about the threshold of 5 per cent.

The stock's dividend yield of 2.3 per cent adds to its attractiveness.

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