GATX’s third quarter results were met with a negative market reaction, as the company’s revenue surpassed Wall Street expectations but earnings per share fell short. Management attributed the revenue growth to stable demand across its North American railcar fleet, continued strength in the secondary market for asset sales, and high utilization in engine leasing. CEO Robert C. Lyons emphasized that “the overall results and the overall environment are very consistent with what we thought coming into the year,” noting strong income from remarketing assets and resilient lease renewals despite macroeconomic headwinds.
Is now the time to buy GATX? Find out in our full research report (it’s free for active Edge members).
GATX (GATX) Q3 CY2025 Highlights:
- Revenue: $439.3 million vs analyst estimates of $435.8 million (8.4% year-on-year growth, 0.8% beat)
- EPS (GAAP): $2.25 vs analyst expectations of $2.33 (3.4% miss)
- Adjusted EBITDA: $239.2 million vs analyst estimates of $268.6 million (54.5% margin, 10.9% miss)
- EPS (GAAP) guidance for the full year is $8.70 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 29%, down from 31.5% in the same quarter last year
- Active Railcars: 101,288, down 1,409 year on year
- Market Capitalization: $5.64 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From GATX’s Q3 Earnings Call
- Ben Moore (Citigroup) asked how GATX plans to bridge the gap between its fourth quarter EPS guidance and consensus estimates. CEO Robert C. Lyons explained that strong secondary market sales and remarketing income will be the primary drivers for the remainder of the year.
- Bascome Majors (Susquehanna) questioned the accretion versus dilution from the Wells Fargo rail asset acquisition. CFO Thomas A. Ellman clarified that pro forma financials do not include expected SG&A or management fee synergies, which should make the deal modestly accretive after integration.
- Andrzej Zenon Tomczyk (Goldman Sachs) inquired about the increase in North America maintenance expenses and future trends. EVP Paul F. Titterton responded that higher costs were due to reliance on third-party shops, but long-term plans focus on increasing in-house maintenance to control expenses.
- Brendan Michael McCarthy (Sidoti) asked whether new car builds could rise if financing costs decline. Titterton indicated that builder capacity has been rationalized and a drop in financing costs is unlikely to spark a production surge, supporting ongoing supply-demand balance.
- Justin Laurence Bergner (Gabelli Funds) sought clarification on the mix of operating versus remarketing income in the Rolls Royce engine joint venture. Ellman explained that the third quarter included a significant insurance recovery, which boosted operating income.
Catalysts in Upcoming Quarters
Over the next few quarters, the StockStory team will be watching (1) the pace and profitability of secondary market railcar sales, (2) the integration progress and synergy capture from the pending Wells Fargo rail asset acquisition, and (3) trends in maintenance expenses as GATX shifts more work to internal shops. Additionally, execution of the DB Cargo railcar acquisition and continued strength in engine leasing will be important indicators of future performance.
GATX currently trades at $158.15, down from $173.03 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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