Critical Review: Freightcar America (RAIL) vs. Its Competitors

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

Volatility and Risk

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 competitors have a beta of 1.21, suggesting that their average stock price is 21% more volatile than the S&P 500.

Profitability

This table compares Freightcar America and its competitors’ 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%

Valuation & Earnings

This table compares Freightcar America and its competitors gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Freightcar America	$465.86 million	-$75.82 million	-12.34
Freightcar America Competitors	$3.77 billion	$360.72 million	4.65

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

Dividends

Freightcar America pays an annual dividend of $0.36 per share and has a dividend yield of 4.2%. 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 competitors, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Freightcar America and its competitors, as reported by MarketBeat.com.

	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 presently has a consensus price target of $9.00, suggesting a potential upside of 4.17%. As a group, “TRANS – EQP&LSNG” companies have a potential upside of 12.22%. Given Freightcar America’s competitors higher probable upside, analysts clearly believe Freightcar America has less favorable growth aspects than its competitors.

Summary

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

About Freightcar America

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.