Matt Elkott, Cowen and Company OEM Transportation Analyst
At Cowen and Company, we expect North American railcar demand to recover in 2021. One of the best-positioned suppliers? The Greenbrier Companies (GBX), with more than a 40% manufacturing share following the acquisition of ARI. Railcar markets in Europe and Brazil are also improving. All of this plus the cost-cutting measures GBX has taken make it our top 2021 pick.
GBX should post progressively improving earnings performances in fiscal year 2021, following what we expect to be a meager first quarter. Our FY21 EPS estimate of $1.62 remains unchanged, but our calendar year 2021 EPS estimate changes to $2.89, from $2.71. Our price target rises from $33 to $41. This is based on our new CY21 EPS estimate and a 14x multiple, which is up from 12x, reflecting improving market conditions as well as GBX’s enhanced competitive position and strong balance sheet, including $842 million of cash at the end of August.