GATX Corp (GMT) Estimates Too Aggressive: Longbow

Longbow Research’s survey of railcar lessors reveals that year-on-year and sequential demands are flat for the industry. Demand for new cars is very low and it is not expected to improve until late 2010.

In light of these developments, GATX Corp.’s (NYSE: GMT) FY10 estimates come across as too aggressive. Utilization and average revenue per car in the lease fleet are expected to fall through 2010 and into 2011. Also, recovery is not expected in shipping joint ventures until 2011. However, GATX is well positioned to take advantage of the downturn in the used rail car market.

The rating has been maintained at Neutral given the volatility and cyclical nature of the rail car industry. This could put delivery and order estimates at risk.