Genesee & Wyoming Inc. (GWR) is fresh off the heels of another solid quarter in which its earnings easily surpassed analyst estimates. Estimates are up and the company’s share price has been rallying accordingly.

Company Description

Genesee & Wyoming, Inc., through its subsidiaries, owns and operates short line and regional freight railroads in the United States, Australia and Canada. The company specializes in commodities like coal, metal and petroleum and services 12 ports in the US and 5 in Australia. Genesee has a market cap of $1.07 billion.

Industry Trend

Even though energy prices have fallen considerably in the last 3 months, rail shipping remains a very cost-effective method of transporting goods. This dynamic continues to work in the favor of the industry, including Genesee and Wyoming, which reported excellent third-quarter results on Nov 3.

Third-Quarter Results

Revenue was up to $159.4 from $131.2 million last year. Net income jumped to $21.2 million, up from $16.2 million. This produced earnings of 58 cents per share, ahead of analyst estimates by 10 cents. Earnings from continuing operations came to 53 cents.

CEO Speak

Chief Executive Officer Jack Hellmann provided some texture to the results, saying that, “In our regions that have more exposure to the current economic downturn such as Oregon and Canada, management has been doing an excellent job of managing costs.”

Credit Facility

With the credit market stuck in a deep freeze, many companies are struggling to access the liquidity needed to fund day-to-day operations and various projects or acquisitions. On Oct 1, Genesee announced that it had closed a $570 million senior bank facility that provides $170 million of untapped capacity. This provides the company with a nice financial buffer in the face of market volatility and uncertainty.

Analyst Estimates

After the good quarter, analysts raised their earnings projections, with the current-year estimate climbing to $1.77 per share from $1.68 7 days ago.

The next-year estimate is also up, increasing to $2.25 per share from $2.10 per share last week, a 27% earnings growth projection from the current year.

The Chart

Shares of GWR have been rallying since the company reported its fourth-quarter results last week, advancing from just above $26 to a recent high at $37.50. The 52-week and all-time high is still far off, just above $47. Take a look at the chart below.

Content Courtesy: Zacks Investment Research

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