The Greenbrier Companies Stock Is in the Buy Zone


The Greenbrier Companies NYSE: GBX stock is returning to the buy zone. The business is boring, and the Q3 release is uninspiring, but neither are reasons for income investors to shed the stock. The results certainly aren’t reasons for its price to drop more than 10%, which is why the stock price correction in GBX is a good buying opportunity to load up on more shares.

The Greenbrier Companies, Inc. stock logo
GBXGBX 90-day performance

Greenbrier Companies

$44.08

-4.48 (-9.22%)

(As of 07/8/2024 ET)

52-Week Range
$32.00

$58.00

Dividend Yield
2.72%

P/E Ratio
12.97

Price Target
$54.00

While tepid, the Q3 results reveal industry normalization following the supply-chain logjams of 2021 and 2022 and a business shift that drives margin improvement.  The results also come with positive guidance that includes a return to growth for this transportation stock

Because the company makes money, pays a market-beating dividend, and repurchases shares, its stock price should rebound soon. Because the company is returning to growth with record-setting margins, the stock price should be able to sustain a rally and increase to a multi-year high by mid-2025. 

The Greenbrier Companies Widens Margin in Tough Environment

Greenbrier struggled in Q3, with revenue contracting by 22% compared to last year, and missed the consensus by more than 1000 basis points. The weakness is primarily due to normalizing rail traffic and the timing of shipments, which are offset to a degree by the growing rental business. The new car and maintenance services segments declined, but the rental business is booming. The company added 600 cars to its fleet, an increase of 4%, to drive a 25% increase in segment revenue and maintained a near-100% utilization rate. This is important because the rental fleet generates recurring revenue and is a high-margin business. 

Margin news is favorable. The company widened its gross margin by 280 bps YoY to near-record levels. The margin improvement carried through to the bottom line and generated the highest EBITDA and GAAP earnings for more than four years. However, the results failed to impress the market. The earnings were weaker than expected and helped lower the stock price despite the 65% YoY increase.

Guidance suggests a stock price rebound will come soon. The guidance was as expected, with revenue and earnings bracketing the consensus forecast reported by MarketBeat, which is no catalyst for a rally. However, the guidance assumes shipments will improve over the quarter, the full-year outlook was reiterated, and CEO commentary is positive. Ms. Tekorius expects sequential revenue growth in Q4; the market forecasts business growth to continue in F2025 and for YoY growth in the back half of the year. 

The Greenbrier Companies’ Capital Return is Safe in 2024

Dividend Yield
2.72%

Annual Dividend
$1.20

Annualized 3-Year Dividend Growth
1.82%

Dividend Payout Ratio
35.29%

Recent Dividend Payment
May. 14

See Full Details

The Greenbrier Company struggled in Q3, but profitability improved, helping sustain balance sheet health and capital returns. While cash decreased, assets and equity improved, providing leverage for revenue and shareholder value. Capital returns include dividends and share repurchases. Share repurchases reduced the count by an average of 4.6% in Q3 and are expected to continue. 

The dividend and valuation make GBX a deep-value/high-yield company compared to the S&P 500. The dividend is worth $1.20 annually or about 2.5%, double the broad market average. Shares are trading near 11x earnings or about half the value of the average S&P 500 company. 

The Greenbrier Companies Sets Up for a Trend-Following Signal

The Greenbrier Companies stock is in a correction but has not broken the trend. The trend was set in 2023 by the institutional investing community, a buyer of this stock. The institutions have bought on balance for five consecutive quarters, helping to lift the market to the high end of a trading range, and will likely support the price now. The risk is that support at the long-term EMA will fail, in which case this stock could pull back to $35 or lower. 

The Greenbrier Companies GBX stock chart

Before you consider Greenbrier Companies, you’ll want to hear this.

MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Greenbrier Companies wasn’t on the list.

While Greenbrier Companies currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Investing Strategies To Help Grow Your Retirement Income Cover

Need to stretch out your 401K or Roth IRA plan? Use these time-tested investing strategies to grow the monthly retirement income that your stock portfolio generates.

Get This Free Report

Like this article? Share it with a colleague.

Link copied to clipboard.





Source link

Content Disclaimer and Copyright Notice
Content Disclaimer

The content provided on this website is sourced from various RSS feeds and other publicly available sources. We strive to ensure the accuracy and reliability of the information, and we always provide source links to the original content. However, we are not responsible for the content’s accuracy or any changes made to the original sources after the information is aggregated on our site.

Fair Use and Copyright Notice

This website may contain copyrighted material, the use of which has not always been specifically authorized by the copyright owner. We believe this constitutes a “fair use” of any such copyrighted material as provided for in section 107 of the US Copyright Law.

In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.

Leave a Reply

Your email address will not be published. Required fields are marked *