FreightCar America 4Q Profit Rises
Thursday February 8, 11:24 am ET
FreightCar America 4th-Quarter Earnings Jump 93 Percent As Margins, Productivity Improve
CHICAGO (AP) -- FreightCar America Inc., which builds railroad freight cars, said Thursday its fourth-quarter profit jumped 93 percent, as sales volumes increased and productivity improved.
Quarterly earnings to common shareholders increased to $34 million, or $2.65 per share, from $17.6 million, or $1.38 per share, during the same period in 2005. Revenue rose 46 percent to $390.8 million from $267.3 million.
Analysts polled by Thomson Financial forecast a profit of $2.84 per share on revenue of $393.3 million.
FreightCar America Chief Executive John E. Carroll said productivity and operating margins improved during the quarter, despite a shift away from aluminum-bodied cars to carbon steel and stainless steel designs. Steel-bodied cars accounted for more than 10 percent of the company's manufacturing output in the period, Carroll said.
Orders for new railcars fell to 2,199 units from 5,035 units in the fourth quarter of 2005.
Full-year earnings more than doubled to $128.7 million, or $10.07 per share, from $45.4 million, or $4.04 per share, in 2005. Revenue advanced 56 percent to $1.44 billion from $927.2 million.
Shares of FreightCar America added 90 cents to $58.98 in morning trading on the Nasdaq.
RAIL earned over $10/sh during 2006, up from earnings of $4/sh in 2005, and now trades for a p/e ratio of about 5. I was right on the direction of earnings, but because the company is very cyclical the market has rewarded RAIL with a miniscule p/e multiple.
I think the market does not realize how long this replacement cycle will be. Remember rolling gondola cars have not been replaced for over 30 years. Somewhere during the years a replacement cycle was missed, so all these gondolas need to be replaced. Also, the demand for the coal to generate clean, efficient power in the eastern US, which these gondolas haul is up sharply over this 30 year period. This translates into an incremental (more than replacement) demand for the gondolas. Lastly, the railroads are very profitable again. So, finally the railroads have the money needed to replace their gondola cars. |
