What Happened?
Shares of leasing services company GATX (NYSE: GATX) jumped 10% in the afternoon session after it struck a $4.4 billion deal to buy about 105,000 railcars from Wells Fargo through a new joint venture with Brookfield Infrastructure Partners.
The deal is expected to expand GATX's North American railcar fleet, enhancing its market position and diversification.
GATX is expected to initially hold 30% ownership, with the option to gain full control over time. The deal is expected to lift earnings slightly in the first full year.
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What The Market Is Telling Us
GATX’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for GATX and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 8% on the news that the company reported a "beat and raise" quarter, with revenue and EPS exceeding analysts' expectations.
Looking ahead, the company provided full-year revenue guidance that outperformed Wall Street's estimates and raised its full-year EPS guidance. Notably, demand for railcars remained strong, with North America's fleet utilization at 99.3% and the renewal success rate above 80%. Zooming out, we think this quarter featured some important positives.
GATX is up 5.5% since the beginning of the year, and at $160.32 per share, it is trading close to its 52-week high of $167.38 from January 2025. Investors who bought $1,000 worth of GATX’s shares 5 years ago would now be looking at an investment worth $2,590.
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