Genesee & Wyoming (GWR) to Post Q4 Earnings: What’s in Store?

Genesee & Wyoming Inc. GWR is scheduled to report fourth-quarter 2018 results on Feb 6, before market open.

In the third quarter, the company delivered impressive results, with earnings and revenues beating the Zacks Consensus Estimate. The bottom line was favored by higher revenues and lower effective tax rate. Also, the top line improved year over year on the back of strong freight revenues.

Genesee & Wyoming has an impressive earnings surprise history. The company’s earnings surpassed the consensus mark in three of the trailing four quarters, the average being 1.6%.

Factors at Play

We expect freight revenues, which account for a major portion of the top line, to boost the company’s results in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter 2018 freight revenues is pegged at $396 million, reflecting a rise from $392 million in the prior-year quarter.

The company usually conducts its business through three segments – North America, Australia and U.K./Europe. Strong performance in the North American segment is expected to boost top-line results in the to-be-reported quarter. The consensus estimate for fourth-quarter freight revenues in North American operations is pegged at $255 million, reflecting a rise from $242 million in the prior-year quarter.

However, revenues in the Australian and U.K./Europe segments might dent top-line growth in the to-be-reported quarter. The consensus estimate for fourth-quarter freight revenues from Australian operations is pegged at $62 million, showing a fall from $64 million reported in the year-ago quarter. Also, the consensus mark for fourth-quarter freight revenues from U.K./Europe operations is at $81 million, indicating a decline from $87 million reported in the prior-year quarter.

Moreover, the current tax law is a boon for U.S.-based transportation companies like Genesee & Wyoming. The significant cut in corporate tax rate is likely to boost cash flow, which will drive the bottom line in the to-be-reported quarter.

However, the bottom line is expected to stay under pressure in the to-be-reported quarter due to high capital expenditures and operating costs. Expenses related to buyouts are also expected to dent bottom-line growth in the fourth quarter.

Earning Whispers

Our proven model does not indicate earnings beat for Genesee & Wyoming this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.

Zacks Rank: Genesee & Wyoming carries a Zacks Rank #3.

Earnings ESP: Genesee & Wyoming has an Earnings ESP of -1.08%. The Most Accurate Estimate is at 89 cents per share, lower than the Zacks Consensus Estimate of 90 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the Zacks Transportation sector may check companies that have the right combination of elements to beat estimates in the upcoming releases.

Expeditors International of Washington, Inc. EXPD has an Earnings ESP of +0.39% and a Zacks Rank #1. The company will release fourth-quarter 2018 results on Feb 19. You can see the complete list of today’s Zacks #1 Rank stocks here.

Copa Holdings, S.A. CPA has an Earnings ESP of +8.41% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Feb 13.

Old Dominion Freight Line, Inc. ODFL has an Earnings ESP of +1.85% and a Zacks Rank #3. The company will release fourth-quarter 2018 results on Feb 7.

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