Rail transportation company Greenbrier (NYSE:GBX) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 11.7% year on year to $762.1 million. The company’s full-year revenue guidance of $3.25 billion at the midpoint came in 9.6% below analysts’ estimates. Its GAAP profit of $1.56 per share was 12.4% below analysts’ consensus estimates.
Revenue: $762.1 million vs analyst estimates of $898.3 million (11.7% year-on-year decline, 15.2% miss)
EPS (GAAP): $1.56 vs analyst expectations of $1.78 (12.4% miss)
Adjusted EBITDA: $123.9 million vs analyst estimates of $137.6 million (16.3% margin, 10% miss)
The company dropped its revenue guidance for the full year to $3.25 billion at the midpoint from $3.5 billion, a 7.1% decrease
Operating Margin: 11%, up from 7.4% in the same quarter last year
Free Cash Flow was $26.3 million, up from -$23.1 million in the same quarter last year
Sales Volumes fell 47.5% year on year (31.1% in the same quarter last year)
Market Capitalization: $1.43 billion
Company Overview
Having designed the industry’s first double-decker railcar in the 1980s, Greenbrier (NYSE:GBX) supplies the freight rail transportation industry with railcars and related services.
Heavy Transportation Equipment
Heavy transportation equipment companies are investing in automated vehicles that increase efficiencies and connected machinery that collects actionable data. Some are also developing electric vehicles and mobility solutions to address customers’ concerns about carbon emissions, creating new sales opportunities. Additionally, they are increasingly offering automated equipment that increases efficiencies and connected machinery that collects actionable data. On the other hand, heavy transportation equipment companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the construction and transport volumes that drive demand for these companies’ offerings.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Greenbrier grew its sales at a sluggish 2.1% compounded annual growth rate. This was below our standards and is a rough starting point for our analysis.
Greenbrier Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Greenbrier’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.7% annually. Greenbrier isn’t alone in its struggles as the Heavy Transportation Equipment industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
Greenbrier Year-On-Year Revenue Growth
We can dig further into the company’s revenue dynamics by analyzing its number of units sold, which reached 3,100 in the latest quarter. Over the last two years, Greenbrier’s units sold averaged 15.7% year-on-year growth. Because this number is better than its revenue growth, we can see the company’s average selling price decreased.
Greenbrier Units Sold
This quarter, Greenbrier missed Wall Street’s estimates and reported a rather uninspiring 11.7% year-on-year revenue decline, generating $762.1 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 1.2% over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.
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Operating Margin
Greenbrier was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.2% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, Greenbrier’s operating margin rose by 8.3 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q1, Greenbrier generated an operating profit margin of 11%, up 3.6 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Greenbrier’s EPS grew at an astounding 23.8% compounded annual growth rate over the last five years, higher than its 2.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Greenbrier Trailing 12-Month EPS (GAAP)
We can take a deeper look into Greenbrier’s earnings to better understand the drivers of its performance. As we mentioned earlier, Greenbrier’s operating margin expanded by 8.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Greenbrier, its two-year annual EPS growth of 131% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q1, Greenbrier reported EPS at $1.56, up from $1.03 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.
Key Takeaways from Greenbrier’s Q1 Results
We struggled to find many positives in these results as its revenue, EPS, and EBITDA missed Wall Street’s estimates. Greenbrier also lowered its full-year revenue guidance. Overall, this was a weaker quarter. The stock remained flat at $44.50 immediately following the results.
The latest quarter from Greenbrier’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
