What Happened?
Shares of rail transportation company Greenbrier (NYSE:GBX) fell 6.5% in the morning session after the company reported fourth-quarter results that, despite beating analyst estimates, revealed significant year-over-year declines in key financial metrics.
While Greenbrier's earnings per share of $1.14 and revenue of $706.1 million surpassed expectations, a deeper look showed trouble. Revenue fell 19.4% compared to the same period in the previous year. The decline in profitability was even steeper, as gross margin contracted by 5.2 percentage points, contributing to a 40.5% drop in gross profit and a 45.4% fall in operating profit. This combination of sharply falling sales and shrinking profits appeared to outweigh the headline earnings beat, leading investors to sell off the stock.
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What Is The Market Telling Us
Greenbrier’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 19% on the news that the company posted much stronger-than-expected results for its fiscal third quarter and raised its profitability guidance for the full year.
The railcar manufacturer reported quarterly earnings of $1.86 per share, handily beating analyst estimates of 98 cents. Sales also beat by a decent margin. The company achieved an aggregate gross margin of 18%, marking the seventh consecutive quarter it has met or exceeded its mid-teens target. Buoyed by the strong performance, Greenbrier raised its full-year guidance for both gross margin and operating margin. The company also highlighted new railcar orders for 3,900 units, valued at over $500 million, and a robust backlog of 18,900 units worth $2.5 billion. Additionally, the board declared its 45th consecutive quarterly dividend and noted ongoing share repurchases.
Greenbrier is up 5.1% since the beginning of the year, but at $49.70 per share, it is still trading 29.7% below its 52-week high of $70.70 from January 2025. Investors who bought $1,000 worth of Greenbrier’s shares 5 years ago would now be looking at an investment worth $1,390.
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