Wednesday, July 3, 2013

Investopedia: Greenbrier Comes Up Short Again

When last I wrote on Greenbrier (NYSE:GBX), I was, at best, tepid on this manufacturer of rail cars and parts for the railroad industry. Although the environment for railroad capex is pretty solid as major carriers like Union Pacific (NYSE:UNP), CSX (NYSE: CSX), and Norfolk Southern (NYSE:NSC) continue to enjoy solid operating cash flows (despite struggles in the coal business), Greenbrier has long lagged rivals like Trinity (NYSE:TRN) and American Railcar (Nasdaq:ARII) in terms of metrics like margins despite good market share.

Management has been saying the right things about prioritizing margins and reducing the capital intensity of the business. Along those lines, a serious restructuring of the Wheel and Parts business is a good move forward, and the new emphasis on tank cars should pay dividends. But as this quarter proves, this is a company where I think investors need to be careful about giving too much benefit of the doubt ahead of real signs of progress.

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