What happened
Railcar manufacturer Greenbrier Cos. (NYSE: GBX) easily topped quarterly expectations and raised its guidance for the full year. Investors are jumping on board, with shares of Greenbrier climbing as much as 13% in Monday morning trading.
So what
Greenbrier provides railcars and related services to the global freight industry. The company earned $0.99 per share in its fiscal second quarter ending Feb. 28 on revenue of $1.12 billion. This easily topped analyst expectations of $0.50 per share in earnings on sales of $835 million.
The company had telegraphed a strong quarter back in March, but investors appear encouraged that Greenbrier sees no slowing in the momentum in the months to come. The company raised revenue guidance for fiscal 2023 to $3.4 billion to $3.7 billion from $3.2 billion to $3.6 billion, offering some upside potential to the $3.41 billion consensus estimate.
"Greenbrier's strong performance in the second quarter is the result of ongoing operational initiatives and robust syndication activity," CEO Lorie L. Tekorius said in a statement. "Railcar orders remained stable throughout the quarter, comprised of a broad range of railcar types."
Now what
Greenbrier has set expectations sky-high going into its April 12 investor day. The company's outperformance has been driven by strong demand for railcars, higher revenue in its maintenance and leasing segments, and an internal push to cut costs that led to a 50-basis-point sequential gain in gross margin.
This business, like many industrial stocks, tends to be cyclical. But Tekorius said that there is the potential for the "margin to improve on a steady or increasing revenue base in future periods."
Despite rallying more than 20% in recent weeks, Greenbrier remains more than 25% below its 52-week high. If Greenbrier can execute its plan from here, there's still room for this stock to keep chugging along.
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