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Key Takeaways from Genesee & Wyoming’s 4Q17 Earnings

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Key Takeaways from Genesee & Wyoming’s 4Q17 Earnings PART 1 OF 6

Genesee & Wyoming Beat 4Q17 Earnings, Stayed Positive on 2018

Genesee & Wyoming’s 4Q17 earnings

On February 8, 2018, Genesee & Wyoming (GWR), the largest short-line operator in the United States, announced its fourth quarter 2017 results. It beat analysts’ adjusted diluted EPS (earnings per share) estimate of $0.75 by 2.9%. Its adjusted diluted EPS (earnings per share) was $0.77. However, on a YoY (year-over-year) basis, its EPS fell 22% compared to $0.99 in 4Q16.

Its reported diluted EPS was $6.81 in 4Q17 due to the $372 million benefit from the implementation of Tax Cuts and Jobs Act passed in 2017.

Genesee &#038; Wyoming Beat 4Q17 Earnings, Stayed Positive on 2018

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Acquisition spree

Genesee & Wyoming is often dubbed a target hunter in the US railroad industry. Keeping with its acquisition tradition, on February 7, 2018, the company announced a stake in Cargomatic. GWR’s chief commercial officer Michael Miller said, “In addition to our investment in Cargomatic, we are pleased to add the Cargomatic platform as an extension of G&W’s rail service at terminal and transload locations across G&W’s U.S. rail network and to work with the Cargomatic team as they expand internationally to Europe and Australia.”

Stock price reaction

After GWR announced its 4Q17 results, the stock fell on February 8, 2018. The next day, it recovered marginally to close at $69.73. Overall, the stock fell 9.5% from February 7, 2018, to close at $73.39.

In 4Q17, GWR’s same railroad carloads declined 3.2% in North America, its largest geographic segment. The markets could be weighing on the weakness in its same railroad business. Since the beginning of 2018, GWR investors lost 11%. Let’s compare that with its peers’ stocks during the same period:

  • Kansas City Southern (KSU): rose 0.2%
  • CSX (CSX): fell 3.4%
  • Norfolk Southern (NSC): fell 3.5%
  • Union Pacific (UNP): fell 4.1%
  • Canadian Pacific Railway (CP): fell 3.3%
  • Canadian National Railway (CNI): fell 6.8%

The Industrial Select Sector SPDR ETF (XLI) fell 0.9% during the same period.

In this 4Q17 post-earnings series, we’ll examine Genesee & Wyoming’s vertical results. We’ll also look at analysts’ recommendations for GWR and its peers.

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