2-Star Stocks Poised to Plunge: GATX?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, railcar leasing operator GATX (NYS: GMT) has received a distressing two-star ranking.
With that in mind, let's take a closer look at GATX's business and see what CAPS investors are saying about the stock right now.
GATXfacts
Headquarters (Founded) | Chicago (1898) |
Market Cap | $2.01 billion |
Industry | Trading companies and distributors |
Trailing-12-Month Revenue | $1.23 billion |
Management | Chairman/CEO Brian Kenney |
Return on Equity (Average, Past 3 Years) | 7.9% |
Cash/Debt | $115 million / $3.44 billion |
Dividend Yield | 2.7% |
Competitors | American Railcar Industries |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 13% of the 69 members who have rated GATX believe the stock will underperform the S&P 500 going forward.
Just last month, one of those bears, BuffettJunior1, summed up the underperform argument:
Why in the world does this company have a $2.1 billion market cap? The company has $3.3 billion in long-term debt and it's been losing hundreds of millions in free cash flow every year. This is another one of those stocks that investors get fooled into investing in. Based on the accrual method of accounting this company looks very profitable. However, in the real business world net income is meaningless, its cash that matters and its cash that keeps the doors open. Net income is just an accounting number that no intelligent investor should every pay attention to. This is just an awful business and I see no reason why it shouldn't underperform significantly over the next five years.
What do you think about GATX, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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