Wow! GATX is one of the few firms that I don't hold a grudge against for not answering my resume submissions years ago. I can't be mad at them because their bottom line results are so clearly stellar:
The rail segment's performance is disappointing given its high utilization rates. GATX may lack the pricing power of major carriers; owning the track, not necessarily the cars, gives railroads their monopoly power. In that sense GATX is just another supplier to the industry, albeit a very large one. It also certainly helps that rail carriers get anti-trust exemptions that allow them to keep rates high.
Rail traffic has a bright future as long as demand for bulk commodities like coal remains high. GATX should have more than a decent future given its absence of long term debt, although it really ought to get its operating cash flow under control. Its dividend of $0.28/share has been steadily climbing since it dropped in 2004 from $0.32 to $0.20. Good news on earnings is important, but improving the company's dreadfully low ROE and ROA (single digits!) is even more important.
Full disclosure: No position in GMT.
Rail equipment leasing giant GATX depended partly on a pickup in its shipping operations to post a 69 percent profit jump to $21.5 million in the second quarter, from a year earlier, while earnings at its dominant rail segment slid 34 percent to $29.4 million.
The rail segment's performance is disappointing given its high utilization rates. GATX may lack the pricing power of major carriers; owning the track, not necessarily the cars, gives railroads their monopoly power. In that sense GATX is just another supplier to the industry, albeit a very large one. It also certainly helps that rail carriers get anti-trust exemptions that allow them to keep rates high.
Rail traffic has a bright future as long as demand for bulk commodities like coal remains high. GATX should have more than a decent future given its absence of long term debt, although it really ought to get its operating cash flow under control. Its dividend of $0.28/share has been steadily climbing since it dropped in 2004 from $0.32 to $0.20. Good news on earnings is important, but improving the company's dreadfully low ROE and ROA (single digits!) is even more important.
Full disclosure: No position in GMT.
