Financial Analysis: Freightcar America (RAIL) versus Its Peers

Freightcar America (NASDAQ:RAIL) is one of 14 publicly-traded companies in the “TRANS – EQP&LSNG” industry, but how does it compare to its peers? We will compare Freightcar America to related businesses based on the strength of its dividends, profitability, earnings, risk, valuation, analyst recommendations and institutional ownership.

Dividends

Freightcar America pays an annual dividend of $0.36 per share and has a dividend yield of 4.0%. Freightcar America pays out -51.4% of its earnings in the form of a dividend. As a group, “TRANS – EQP&LSNG” companies pay a dividend yield of 1.5% and pay out 20.2% of their earnings in the form of a dividend. Freightcar America is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

32.0% of Freightcar America shares are owned by institutional investors. Comparatively, 86.4% of shares of all “TRANS – EQP&LSNG” companies are owned by institutional investors. 28.7% of Freightcar America shares are owned by company insiders. Comparatively, 10.3% of shares of all “TRANS – EQP&LSNG” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Freightcar America and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freightcar America	-2.21%	-14.89%	6.92%
Freightcar America Competitors	10.91%	4.90%	2.78%

Analyst Ratings

This is a summary of current recommendations for Freightcar America and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freightcar America	1	0	1	1	2.67
Freightcar America Competitors	131	576	1002	66	2.57

Freightcar America currently has a consensus target price of $9.00, indicating a potential upside of 1.24%. As a group, “TRANS – EQP&LSNG” companies have a potential upside of 11.14%. Given Freightcar America’s peers higher possible upside, analysts plainly believe Freightcar America has less favorable growth aspects than its peers.

Risk and Volatility

Freightcar America has a beta of 2.19, suggesting that its stock price is 119% more volatile than the S&P 500. Comparatively, Freightcar America’s peers have a beta of 1.21, suggesting that their average stock price is 21% more volatile than the S&P 500.

Earnings and Valuation

This table compares Freightcar America and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Freightcar America	$465.86 million	-$75.82 million	-12.70
Freightcar America Competitors	$3.80 billion	$360.72 million	4.51

Freightcar America’s peers have higher revenue and earnings than Freightcar America. Freightcar America is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Summary

Freightcar America peers beat Freightcar America on 8 of the 15 factors compared.

Freightcar America Company Profile

FreightCar America, Inc., through its subsidiaries, engages in design, manufacture, and sale of railcars and railcar components for the transportation of bulk commodities and containerized freight products in the United States and Mexico. It operates in two segments, Manufacturing and Parts. The company offers a range of railcars, including open top hoppers, mill gondola cars, intermodal and non-intermodal flat cars, coal cars; bulk commodity cars covered hopper cars, coil steel cars, boxcars, woodchip hoppers, aluminum vehicle carriers, and articulated bulk container railcars. It also sells used railcars; rebuilds, converts, and leases railcars; and sells forged, cast, and fabricated parts for various railcars. The company's customers primarily include shippers, railroads, and financial institutions. FreightCar America, Inc. was founded in 1901 and is headquartered in Chicago, Illinois.