I've always been fascinated with the images and sounds of trains (and the old west). I've also always been interested in the companies in the leasing business. GATX Corporation is in both of these businesses so I thought I'd take a look at the company and see if there's any value there for an investor like me.
GATX Corporation is an equipment finance company founded in 1898 and based in Chicago, Illinois. It's primary activities consist of leasing tankers/railcars in North America and Europe and locomotives in America. It also has a significant investment in industrial equipment and marine assets, including the ownership of the American Steamship Company which operates steamships on the Great Lakes.
GATX Corporation is an equipment finance company founded in 1898 and based in Chicago, Illinois. It's primary activities consist of leasing tankers/railcars in North America and Europe and locomotives in America. It also has a significant investment in industrial equipment and marine assets, including the ownership of the American Steamship Company which operates steamships on the Great Lakes.
The Company
| GATX Corporation (GMT) leases, operates, manages, and remarkets assets in the rail and marine markets in North America and internationally. The company operates in four segments: Rail North America, Rail International, American Steamship Company (ASC), and Portfolio Management. The Rail North America segment primarily leases railcars and locomotive, as well as offers pays ad valorem taxes and insurance, and other ancillary services; operates a network of service facilities that perform repair, maintenance, modification, and regulatory compliance services on the railcar fleet; and provides maintenance services, including interior cleaning of railcars, general repairs to the car body and safety appliances, regulatory compliance work, wheelset replacements, exterior blast and painting, and car stenciling. The Rail International segment is engaged in the railcar leasing business, as well as offers repairs, regulatory compliance, and modernization work for railcars. The ASC segment operates a fleet of vessels that provide waterborne transportation of dry bulk commodities, such as iron ore, coal, limestone aggregates, and metallurgical limestone for automobile manufacturing, electricity generation, and non-residential construction industries. The Portfolio Management segment invests in operating assets, finance lease assets, and secured loans, as well as manages portfolios of assets for third parties; and provides leasing, asset remarketing, and asset management services. As of December 31, 2013, it operated a fleet of 13 vessels, as well as approximately 136,172 railcars and 595 locomotives. GATX Corporation was founded in 1898 and is headquartered in Chicago, Illinois. (Daily Chart) (Weekly Chart) | 24 August 2014 Price $65.99 1yr Target $73.40 Analysts 5 1yr Cap Gain 11.22% Dividend $1.32 Yield 2.00% 1yr Tot Return 13.22% Market Cap $2.96 Bil Payout Ratio 30.41% Beta 1.06 EPS (ttm) $4.34 EPS next yr $4.89 P/E 15.21 PEG 1.27 Debt/Equity 3.06 ROA 3.00% ROE 14.70%  |
The General Rail Business
GATX maintains a diverse railcar fleet of approximately 131,000 railcars and is one of the largest privately owned railcar fleets in the world with over a century of rail industry experience. They also have an ownership interest in an additional 4,000 railcars through investments in affiliated companies and actively manage another 1,100 railcars for other third party owners. They lease these tank cars, freight cars and locomotives in North America, Europe and India and offer rail leasing as well as maintenance, financial, and management expertise to their customers. Finally they utilize their extensive rail asset knowledge and experience to remarker both wholly owned and managed rail assets.
Their rail customers operate in the petroleum, chemical, transportation, and food/agriculture industries and as a result GATX's worldwide railcar fleet consists of diverse railcar types that our customers use to ship approximately 550 different commodities.
GATX maintains a diverse railcar fleet of approximately 131,000 railcars and is one of the largest privately owned railcar fleets in the world with over a century of rail industry experience. They also have an ownership interest in an additional 4,000 railcars through investments in affiliated companies and actively manage another 1,100 railcars for other third party owners. They lease these tank cars, freight cars and locomotives in North America, Europe and India and offer rail leasing as well as maintenance, financial, and management expertise to their customers. Finally they utilize their extensive rail asset knowledge and experience to remarker both wholly owned and managed rail assets.
Their rail customers operate in the petroleum, chemical, transportation, and food/agriculture industries and as a result GATX's worldwide railcar fleet consists of diverse railcar types that our customers use to ship approximately 550 different commodities.
The American Steamship Company (ASC)
ASC operates the largest fleet of US flagged vessels on the Great Lakes providing waterborne transportation of dry bulk commodities such as iron ore, coal, limestone aggregates and metallurgical limestone, which serve end markets that include domestic automobile manufacturing, electricity generation and non-residential construction. Customer service, primarily in the form of scheduling flexibility, reliability and operating safety, is the key to ASC’s success. ASC’s sailing season generally runs from April 1 through December 31 but depending on customer demand and weather conditions, certain vessels may commence operations during March and continue to operate into January of the following year.
At December 31, 2013, ASC’s fleet consisted of 17 vessels. Fourteen of the vessels are diesel powered, have an average age of 36 years and estimated useful lives of 65 years. Two steam powered vessels were built in the 1940s and 1950s and have estimated remaining useful lives of six years. The other vessel in ASC's fleet is an articulated tug-barge, which is leased by ASC under an operating lease that expires in 2017.
The Fundamentals
| Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 | Revenues $1.56 Bil $1.45 Bil $1.32 Bil $1.24 Bil $1.19 Bil $1.11 Bil $1.12 Bil $1.44 Bil $1.34 Bil $1.22 Bil $1.13 Bil $1.23 Bil $1.31 Bil | Earnings $4.83 $4.33 $3.59 $2.88 $2.35 $1.72 $1.70 $3.89 $3.76 $2.00 $-0.29 $3.04 $1.56 | Dividends $1.40 $1.32 $1.24 $1.20 $1.16 $1.12 $1.12 $1.08 $0.96 $0.84 $0.80 $0.80 $1.28 | Payout Ratio 28.98% 30.48% 34.54% 41.66% 49.36% 65.11% 65.88% 27.76% 25.53% 42.00% -NA- 26.31% 82.05% |
| Revenue Growth Rate 3 year = 5.88% 5 year = -1.73% 10 year = 0.07% | Earnings Growth Rate 3 year = 27.48% 5 year = -1.60% 10 year = 8.69% | Dividend Growth Rate 3 year = 3.41% 5 year = 2.80% 10 year = -0.32% |
The Technicals
 Daily Chart |  Weekly Chart |
The Competition
GATX Corporation is part of the Rental and Leasing Services Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. They are listed in the order of their market capitalization.
Conclusion
I love the Rail business and I love the Leasing business, but I just don't see where GATX improves from here. While the estimates are improving going forward, the last ten years worth of the fundamentals are not a very good predictor of those future estimates. The technical charts above don't predict any forward progress in the price of the stock either. I intend to include this company on my watch list but there's no indication that I'll doing any more than simply watching this stock. If things change in the future, I'll revisit this company and its fundamentals.
The Live Interactive Chart
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