What happened
Shares of railroad freight car manufacturer Greenbriar Companies (NYSE: GBX) surged 25% through 11:30 a.m. ET on Thursday after crushing analyst earnings forecasts like, well, a freight train.
Heading into its fiscal third quarter of 2023, analysts had forecast Greenbriar would earn $0.58 per share on quarterly sales of $898.8 million. But Greenbriar nearly doubled that earnings forecast, reporting adjusted profits of $1.02 per share, with sales coming in at $1.04 billion.
So what
The news wasn't quite as good as this makes it seem. While earnings were $1.02 adjusted (to not count losses related to the company's sale of its Gunderson Marine unit), actual earnings as calculated according to generally accepted accounting principles (GAAP) came in a bit lighter than that -- just $0.64 per share.
Still, that was 611% more profit than the $0.09 per share that Greenbriar earned in last year's Q3, and sales were up 31% -- both impressive results.
Now what
It remains to be seen whether Greenbriar can maintain this momentum, however, and for that reason, investors might want to be cautious about buying into today's rally.
On the one hand, CEO Lorie Tekorius notes that Greenbriar is enjoying "continued operating momentum and strong commercial activity," and expects to double annual recurring revenue at Greenbriar's leasing and management services segment this year. On the other hand, it's worth pointing out that this is Greenbriar's smallest market segment. (Maintenance is 3 times its size, and manufacturing roughly 20 times its size.)
It's also worth noting that while Greenbriar delivered 6,600 railcars in Q3, it took in new orders for only 4,600 railcars in the quarter. This may foreshadow a slowdown in sales at the company's flagship manufacturing division -- and a slowdown in sales growth as well.
Caveat investor.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
